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Mushroom business plan in sri lanka

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This the business plan for the mushroom industry in Sri Lanka. This have how innovate new idea and the how develop a new business successfully.

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Mushroom business plan in sri lanka

  1. 1. 7/30/2014 Mushroom Farming ENTREPRENEURSHIP BBA 303 3rd year 1st Semester 1st Assignment Name-: K.T Liyanage Reg. No.-: A/10/BBA/148 Lec. Name-: Ms R.M.C Kumari
  2. 2. 1 Contents 1 Introduction.............................................................................................................3 2 About the Business..................................................................................................4 3 Details of the Business:...........................................................................................5 3.1 The Details about the Business ..........................................................................5 3.2 Details about the product charactericts ..............................................................6 3.2.1 Products: ...................................................................................................6 3.2.2 Process of Production: ..............................................................................7 3.2.3 Location: ...................................................................................................8 3.2.4 Workers:....................................................................................................8 3.2.5 Photos of the Work Place..........................................................................9 4 Business Plan for a Startup Business....................................................................10 4.1 The usefulness of business plan .......................................................................10 4.2 The Benefits of using Business plan ................................................................10 5 Marketing Strategy................................................................................................12 5.1 Marketing mix ..................................................................................................12 5.1.1 Product ....................................................................................................12 5.1.2 Price ........................................................................................................13 5.1.3 Place........................................................................................................13 5.1.4 Promotion................................................................................................14 6 Human Recourse Strategy.....................................................................................14 7 Financial Strategy .................................................................................................15 7.1 Initial capital investmemt .................................................................................15 7.2 Projected income statement..............................................................................16 7.3 Balance sheet for the year 2013 .......................................................................17 7.4 Break Even point..............................................................................................18 7.5 Payback period .................................................................................................18 8 Innovation Strategies ............................................................................................18 8.1 Entrepreneurial Characteristics ........................................................................18 8.1.1 Commitment, Determination and Perseverance: ....................................19 8.1.2 Creativity and Innovations:.....................................................................19 8.1.3 Resourcefulness: .....................................................................................19 8.1.4 Risk Taking:............................................................................................19 8.1.5 Tolerance for Failures:............................................................................19 8.1.6 Visionary:................................................................................................20
  3. 3. 2 8.1.7 Optimism: ...............................................................................................20 8.1.8 Integrity and Reliability:.........................................................................20 8.1.9 Knowledge about the Market and All- around knowledge: ...................20 8.1.10 Flexible and able to Adopt:.....................................................................20 8.1.11 Energetic and Hard Working:.................................................................20 9 Sales Forecast........................................................................................................21 9.1 Sales Forecast...................................................................................................23 10 The important of Creativity and Innovation ideas to the Success the Business...24 11 Environmental Factors to Success the Innovation................................................25 12 Conclusion ............................................................................................................26
  4. 4. 3 1 Introduction Entrepreneur is one who undertakes to organize, manage, and assume the risk of a business. Today, an entrepreneur is an innovator or developer who recognizes and seizes opportunities and converts those opportunities into marketable ideas. This assignment is based on a Research on an entrepreneur. I interviewed the entrepreneur and collected details about his business, creativity and innovation…etc. Then that information are summarized and presented through this assignment. I selected the entrepreneur who is doing a concrete industry. Firstly I collected details about the nature of the business then I collect the details about his business plan after that I made some questions before meeting the entrepreneur. I could understand his entrepreneurial characteristics when I talk with him. And I could see his products and collect details about those. Then I considered how the creativity and innovation are important to his success and how does he encourage an environment of creativity in his business. Also I consider about his Marketing Strategy, Human Resource Strategy, Financial Strategy and Innovation Strategy. Also I get the progress of business in last 3 year.
  5. 5. 4 2 About the Business About the Entrepreneur: Name of the Entrepreneur : K.T.M Karunarathne Address : No. 225, Muruthalawa Raod, Puwakgahakumbura, Peradeniya. Telephone : 071 4683367 / 077 8102515 Age : 41 Years Gender : Male Civil Status : Married Educational Qualifications : Passed (G.C.E) O/L Awards : Winner of the Star Awards for the Best Entrepreneur of Central Province in 2012
  6. 6. 5 3 Details of the Business: The business is mainly focusing mushroom cultivation of the Smallholder Plantation. Entrepreneurship Programme illustrates how best public and private stakeholders can get together to launch small but commercially viable. The project provided a group of women interested in engaging in mushroom cultivation with technical, financial and management assistance backed up with a strong market linkage. The „mushroom project‟ started in 2009 with 2 beneficiaries. This expanded to three other sites involving 5 beneficiaries in 2010. All beneficiaries were provided with technical training such as mushroom hut construction, preparation of growing bags, filling of bags, sterilization, and preparation of spawns. The resource persons were drawn from provincial agricultural agencies. Furthermore, two successful female entrepreneurs who pioneered the project in 2009, joined the training team to train newcomers in 2010 and 2011. Apart from technical training, the Smallholder Plantation Entrepreneurship Programme has established marketing linkages with reputable private companies to sell the produce. 3.1 The Details about the Business Name of the Business : Nimasha Mushroom Dealers. Address : Nimasha Mushroom Dealers Horagasmulla, Divulapitiya, Srilanka Telephone : 0714683367 / 0778102515 Commencement : 11th of June 2014 Reg. No. : IDACP / 00120
  7. 7. 6 3.2 Details about the product charactericts 3.2.1 Products: He is a supplier and manufacturer of following products.  Mushroom 50g packets  Mushroom 100g packets  Mushroom Jam products
  8. 8. 7 3.2.2 Process of Production: There are six steps to growing Mushroom. 1) Making Mushroom Compost This phase of compost preparation usually occurs outdoors although an enclosed building or a structure with a roof over it may be used. 2) Finishing the Compost There are two major purposes to Phase II composting. Pasteurization is necessary to kill any insects, nematodes, pest fungi, or other pests that may be present in the compost. And second, it is necessary to remove the ammonia which formed during Phase I composting. Ammonia at the end of Phase II in a concentration higher than 0.07 percent
  9. 9. 8 is often lethal to mushroom spawn growth, thus it must be removed; generally, a person can smell ammonia when the concentration is above 0.10 percent. 3) Spawning Mushroom compost must be inoculated with mushroom spawn (Latin expandere = to spread out) if one expects mushrooms to grow. 4) Casing Casing is a top-dressing applied to the spawn-run compost on which the mushrooms eventually form. 5) Pinning Mushroom initials develop after rhizomorphs have formed in the casing. The initials are extremely small but can be seen as outgrowths on a rhizomorph. 6) Cropping The terms flush, break, or bloom are names given to the repeating 3- to 5-day harvest periods during the cropping cycle; these are followed by a few days when no mushrooms are available to harvest. 3.2.3 Location: The home and the land of the work place are nearly located and close to the, Divulapitiya Road. There is a small hut in the work place. Stocks of products are stacked on the land floor and a side of the road. 3.2.4 Workers: He has one permanent worker and several temporary workers. The proprietor also works in the site.
  10. 10. 9 3.2.5 Photos of the Work Place
  11. 11. 10 4 Business Plan for a Startup Business 4.1 The usefulness of business plan The business plan consists of a narrative and several financial worksheets. The narrative template is the body of the business plan. This business is using Business Plan. It contains more than 150 questions divided into several sections. The real value of creating a business plan is not in having the finished product in hand; rather, the value lies in the process of researching and thinking about the business in a systematic way. The act of planning helps Entrepreneur to think things through thoroughly, study and research if he is not sure of the facts, and look at his ideas critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later. This business plan is a generic model suitable for all types of businesses. However, this Entrepreneur is using and modify it to suit to his particular circumstances. It also has tips for fine‐tuning his plan to make an effective presentation to investors or bankers. 4.2 The Benefits of using Business plan There are 10 benefits of using business plan for the Nimasha Mushroom Dealers. They are; 1. The company will stay on strategy. It's hard to stick to strategy through the daily routine and interruptions. Use a business plan to summarize the main points of his strategy and as a reminder of what it both includes and rules out. 2. Business objectives will be clear. Use your plan to define and manage specific measurable objectives like web visitors, sales, margins or new product launches. Define success in objective terms. 3. The Entrepreneur’s educated guesses will be better.
  12. 12. 11 Use the Business Plan to refine his educated guesses about things like potential market, sales, and costs of sales, sales drivers, lead processing and business processes. 4. Priorities will make more sense. Aside from the strategy, there are also priorities for other factors of Mushroom business like growth, management and financial health. Use his plan to set a foundation for these, then to revise as the business evolves. 5. The Entrepreneur understand interdependencies. Use a plan to keep track of what needs to happen and in what order. For example, if you have to time a product release to match a testing schedule or marketing to match a release, this business plan can be invaluable in keeping the entrepreneur organized and on track. 6. Milestones will keep Entrepreneur on track. Use a business plan to keep track of dates and deadlines in one place. This is valuable even for the one-person business and vital for teams. 7. You'll be better at delegating. The business plan is an ideal place to clarify who is responsible for what. Every important task should have one person in charge. 8. Managing team members and tracking results will be easy. So many people acknowledge the need for regular team member reviews and just as many admit they hate the reviews. The plan is a great format for getting things in writing and following up on the difference between expectations and results with course corrections. 9. The Entrepreneur can better plan and manage cash flow.
  13. 13. 12 No business can afford to mismanage cash. And simple profits are rarely the same as cash. A cash flow plan is a great way to tie together educated guesses on sales, costs, expenses, assets you need to buy and debts you have to pay. 10.Course corrections will keep your business from flopping. Having a business plan gives the entrepreneur a way to be proactive or not reactive about business. Don't wait for things to happen. Plan them. Follow up by tracking the results and making course corrections. It's a myth that a business plan is supposed to predict the future. 5 Marketing Strategy 5.1 Marketing mix In this phase, we have developed marketing mix in which all the 4 Ps were consistent. These 4 Ps easily adopt any market changes. These Ps are 1. Product. 2. Price. 3. Place. 4. Promotion 5.1.1 Product This Entrepreneur are going to sell his product which is mushrooms. After cutting, the mushrooms are ready for before delivery, it is segregated them into three categories. “A” Category: The mushrooms included in this category are properly weighted and their color is also good. Mostly the oyster mushrooms with light brown colour are included in this category and the size of the flower is 5-7 inches. “B” Category: The mushrooms included in this category are smaller in size than the A category mushrooms. But some full size mushrooms were also included in this category due to their color. The color of such mushrooms didn’t match the A category requirement and thus they are included in this category.
  14. 14. 13 “C” Category: The mushrooms included in this category are spoiled or these include the mushrooms that attain their maturity level. These mushrooms are broken sometimes from centre and hence are included in this category 5.1.2 Price They are try to capture higher market share so they set their prices at a level that are affordable by their customers. As the price of canned mushroom is very high, so to capture market, they reduce their price. Canned mushrooms are available in market at price of 800-1200 per kilogram depending upon the quality. So they set our prices according to our product categories. CATEGORY PRICE PER KILOGRAM “A” Category 500 “B” Category 350 “C” Category 250 5.1.3 Place Mushroom will be marketed locally through a free market system. As we know that the main market of mushroom is pizza parlors, restaurants and shopping malls. But initially this Entrepreneur is mainly targeting just the shopping malls target market, pizza parlors and the restaurant. This is because the trend of fresh pan pizza is raising a lot. And customers they are targeting are used of dining outside a lot. And in the next six months, they assumed to also provide fresh mushrooms in big shopping malls like Cargills, Kells Super and Arpico super center.
  15. 15. 14 5.1.4 Promotion As their knowing that their customer is well aware of the taste of the mushrooms. To introduce the nutritional aspect of mushroom, they use brochures for their promotion. Moreover, they should also take part in food festivals to promote our product. 6 Human Recourse Strategy When it comes to optimal HCM, HR leaders need to understand how technology can minimize or eliminate the costs with paper processes and the associated inefficiencies. HR executive for the Nimasha Mushroom Dealers. “There are significant dollars tied to reporting errors, redundancies, and the inability to retrieve vital workforce information with on-the-spot access. When it is evaluated their return on investment, including both hard- and soft-cost savings, they had a real moment. They couldn’t afford not to take advantage of functionality. In addition to controlling and cutting costs, they have revitalized HR and impacted their overall business. Hiring managers have become more accountable, and employees are taking more control of their financial lives because they now can conveniently access their ongoing income and retirement plan details. Because employee metrics are stored in one single, easy-to-manage platform that is available to the entire HR team, managers, and employees, the National Mushroom’s information accuracy has improved significantly. With reliable, centralized, and secure information, as well as instant, configurable reporting, the HR team is well-positioned to reduce risk and vulnerability to legal issues and noncompliance. To get a seat within the executive circle, Osunsade recommends HR practitioners leverage technology to automate processes, convert workforce metrics into business results, and establish credibility as corporate strategists. She also believes in the power of relationships with her HCM provider. To prosper in today’s business environment, HR executives must focus on finding and trusting the right HCM business partner,” said Osunsade. “More than a technology company, Ultimate has been establishing long-standing, collaborative relationships with
  16. 16. 15 its customers for more than two decades. I can attest that Ultimate is the real deal. Now with UltiPro supporting us, we are being proactive and improving the quality of what we provide to our business and to our workforce.” 7 Financial Strategy 7.1 Initial capital investmemt Products Cost Purchase of raw material 300000 Building rent 25000 Iron Shelves 30000 Supplies (office and operation) 10000 Cutting equipment 5000 Utilities 30000 Generator 120000 Humidity controller 10000 TOTAL 530000
  17. 17. 16 7.2 Projected income statement Particulars 2011 2012 2013 Sales 1440000 1800000 2400000 less: Cost of goods sold Cotton Waste 44800 61600 80500 Spawn 24000 30000 37500 Plastic Bags 9600 12000 17500 Labor 224000 300000 375000 Total CGS 302400 403600 510500 Gross profit 1137600 1396400 1889500 Less: Operating expenses: Administrative exp Salaries Electricity Traveling 240000 120000 48000 264000 132000 50000 290400 144000 52000 Marketing exp Advertisement Telephone 120000 24000 100000 25000 100000 27000 Total Operating Expenses 552000 571000 613400 Earnings before income tax 585600 825400 1276100 Tax deduction: (5% on sales) 72000 90000 120000 Net income 513600 735400 1156100
  18. 18. 17 7.3 Balance sheet for the year 2013 Particulars Debit (Rs.) Credit (Rs.) Current Assets: Cash 1000000 Inventory (F/G, Material) 56800 Total Current Assets 1056800 Fixed Assets: Land & Building (25000/month rent) 300,000 Machinery (30,000) 27000 Less: accumulated depreciation (30,000 @ 10%=3000) Total Fixed Assets 327000 TOTAL ASSETS 1383800 Current Liabilities: Estimated income tax 72000 Total current Liabilities 72000 Stockholders’ Equity: Common stock 776600 Retained earnings 535200 Total stockholders’ equity 1311800 TOTAL LIABILITIES & STOCKHOLDERS EQUITY 1383800
  19. 19. 18 7.4 Break Even point =Total Fixed Cost/ (selling price per unit-variable cost per unit) = 832800/ (500-5) = 832800/495 = 1682 units 7.5 Payback period =Investment/Retained earnings =1000000/535200 =1.87 years =1 year, 10 months and 13 day 8 Innovation Strategies 8.1 Entrepreneurial Characteristics Mr. Karunarathne had started his business on 11th July 2002. Today, it is a successful and strong business. He had worked in a hardware shop and a private company after his A/L before starting this business. Although, he says “he didn’t like to work under an employer and he dreamed his own business from his school age. When he started the business he had 245 rupees on his hand. He had to borrow some money from a relative and also applied for the bank loans. He had made concrete bricks very firstly. Then he had started to make other items with the growth of his business. There are many characteristics of a successful entrepreneur. When I interview Mr. Karunarathne, I Could found special characteristics through his story of business life. I can list those characteristics as follow.
  20. 20. 19 8.1.1 Commitment, Determination and Perseverance: Mr. Karunarathne also had to face so many problems when he was starting his business. First of all he had to find money. Then he had to find necessary knowledge about the industry. He says some people do not tell the tips and secrets. Therefore he has to find these things through his experience. He had not machine for making concrete bricks. Though, he had to do it in energy of his hands. There had a legal issue of his land. So he had stacked his products in a side of the road, but his determination was not going down. Now he has big space for his work. Today he is a successful businessman. 8.1.2 Creativity and Innovations: When creating a business idea, many entrepreneurs have to be very creative. I could understand the creativity of this person when I see his work. He started his business with making concrete bricks, but the varicose creative items now there. (Colour paving blocks, Concrete Fence Posts and other ornaments). He stacks his products in a creative way. He is very innovative person. He seeks new designs for his molds and tries to make a unique product. Therefore the creativity and innovation is a secret of his success. 8.1.3 Resourcefulness: He stocks his products to satisfy the customer needs. He has enough resources for meet evenly unexpected orders. Though he has one permanent worker, if he has to complete huge order he can find workers any time. 8.1.4 Risk Taking: When he started business he has to borrow money from different parties. He has to pay that credits through the income of his business. It was difficult, but he took that risk and success his business. 8.1.5 Tolerance for Failures: Entrepreneurs use failing as a learning experience. Mr. Karunarathne says “bricks and pots were broken at the beginning, but he didn’t give up his goal”. He found new methods and tips for that through his experience.
  21. 21. 20 8.1.6 Visionary: Entrepreneurs know where they want to go. They have a vision or concept of what their firm can be. Actually this entrepreneur has a vision where they are go to what are the developments needed. He plans costs incurred every day and put a note about that. That is the way he forecasts plans for months and year. Every day he keeps records neatly beginning of the day end of the day without any knowledge related to the accounting. 8.1.7 Optimism: He always thinks positively. He believes that “If I work hard I can get success. He tells me his business has never failed. It is not practical but his thinking is great as an entrepreneur. 8.1.8 Integrity and Reliability: Integrity and reliability are the glue and fiber that bind successful personal and business relationships and make them endure. He always tries to produce a quality product to his customers. And also he maintains good relationship with the neighbors and villagers. He had contributed to the society of welfare (dansal, to the temples). 8.1.9 Knowledge about the Market and All- around knowledge: He could explain his competitors of his industry. He knows this industry is developed day by day. So we can get opportunities more and more. 8.1.10Flexible and able to Adopt: Another concrete work place is launched near to his work place for making concrete bricks. So he stopped making concrete bricks because of the competitor as well as it was gained low profit. So he easily adopts this situation while not harming to his vision. 8.1.11Energetic and Hard Working: He also works his work place with encourage. He tries his best to achieve his target. No matter it is day or night. He gives his full energy to his business. When I go there he was working with his worker.
  22. 22. 21 9 Sales Forecast This company will remain with a single client throughout this first year before expanding in the future. We need to establish history with one client, and we also need to maintain the constraints on this business as a single hobbyist business. During the following year, when they have a driver’s license, they can expand to three clients.
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  24. 24. 23 9.1 Sales Forecast Year 1 Year 2 Year 3 Sales Initial client 2,40000 7,20000 9,00000 Other 0 0 0 Total Sales 2,40000 7,20000 9,00000 Direct Cost of Sales Year 1 Year 2 Year 3 Unbilled minor accessories, 48 144 180 Testing supplies, etc Other 0 0 0 Subtotal Direct Cost of Sales 48 144 180
  25. 25. 24 10 The important of Creativity and Innovation ideas to the Success the Business Most of the entrepreneurs start his business while getting risks on the profits or income. They borrow money from banks or other parties. Therefore they have to pay off loans even they earn losses instead of profits. This entrepreneur also faced for these situations. They earn more and more with innovations and creativity. There are no innovations or creativity in the business that business will fail. If one be success in his business or earn more profits the reason will be creative and innovations. Mr. Karunarathne also started his business making concrete bricks. He says “his profit from one concrete brick is one rupee”. Unless he innovative he cannot be success today in this way. He started to make new concrete items and earn profits more and more. Then those profits are reinvested in the business. The return on the investment of his business is 23%. He could have found new space for his business, and also he recruited experienced worker. He attracts customers and endures with long period.
  26. 26. 25 11 Environmental Factors to Success the Innovation Some public sector authorities or ministries are appreciated and awarded the creativity and the innovation of the entrepreneurs. This also is a facet of success. This entrepreneur also won star award for the best entrepreneur of Central Province from 2005-2009. So we can get an idea about how creativity and innovation help for the success of a business. Small or medium scale businesses are conducted with fewer workers. Therefore proprietor/ entrepreneur have to work in the business. So I think encourage himself for making creative ideas. In this business has one worker. He trusts him and sometimes gives responsibility of the work place. He says, “I give forgiveness for the mistakes to the workers because I also make mistakes”. He takes advices and ideas from his experienced worker. He says “my worker has experienced and knowledgeable than me”. And he gets ideas from the supplier of fiber molds about the designs. I can see an innovative climate is built within the work place. Although the entrepreneur also work in the place, but he don’t supervised or strictly advised for his workers. Most of the entrepreneurs create innovative climate himself. This entrepreneur hopes to start hardware shop and showroom in the Peradeniya Town. Always he tries to achieve his targets. So, he thinks creative always creative ideas.
  27. 27. 26 12 Conclusion The business of entrepreneur is the Mushroom industry. He makes, Mushroom related products. There are many characteristics of the entrepreneurs. I found many characteristics while I am talking with the entrepreneurs, like determination, creativity and innovation, risk taking…etc. Most of the entrepreneurs come up with new ideas according to their personal interests. Entrepreneurs can earn profits through the creativity and innovations. And also the entrepreneur encourage creative environment in the work place.
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