Learning objectives
At the end of this session participants shall: Know what a business plan is.
Know why it is important to have a business plan while producing seed as a business
Understand the components of a business plan.
Be able to prepare a complete business plan for their seed business. Have a clear direction of their business in a given period of time.
Need of a Business plan and a business model
While working with LSBs for two years, we have seen them graduate from one level to another. For instance at the start of the programme, a number of complaints came from most LSBs and some of these included;
“We have problems with booking foundation seed because we do not know how much we need and always have problems with collecting money for the purchases. As a result, we end up receiving the foundation seed late and plant late, thus the reason for the poor yields” – one of the common LSB complaints.
Other similar complaints include;
“We do not know the foundation seed requirements thus cannot make early bookings leading to delayed/inadequate purchases!”
“We do not know the costs involved in the seed business to effectively mobilize resources thus leading to lack of finances!”
“We cannot accurately schedule the activities nor properly assign labour thus leading poor agronomic practices and poor yields!”
“We do not determine the right mix of categories of crops and varieties to grow leading to failure to market seed and under supply of our reliable markets!”
A good LSB business plan will endeavour to help the LSB members in forecasting the business costs and benefits while identifying and managing all risks associated with the business venture to ensure success. For LSBs to be able to do seed production for business gain in a sustainable manner some key aspects such as business planning are inevitable.
Content
Key messages
LSB members know and are able to draw their business plan.
LSB members are able to know how much seed production will cost them in a season/year
Most small farming businesses in Uganda are run without business plans and they have faced a number of challenges regarding their business growth. Businesses that do not do business planning face a number of challenges such as collapse among others. A number of development programmes/projects have engaged farmer groups in seed multiplication but collapsed immediately because the business aspect of seed production was over looked. Things such as group self-investment, business planning were over looked. For a seed business to be successful, the members have to be equipped with skills in business development.
What is a business plan?
A business plan is a written document that sets out the basic idea (a dream) underlying a business and related start-up considerations (Longenecker, et al. 2003) or an entrepreneur’s game plan.
A business plan should lay out your basic idea for the venture, describe where you are now, indicate where you want to go, and outline how you propose to get there with clear evaluation of the viability of the venture as well as success factors.
Why a business plan is needed in a local seed Business
1. To show the cash flow you expect or how much money you expect to spend on the business in comparison with how much you bring into the business during a given period of time.
2. To facilitate projections for the seed business.
3. To show funding or credit agencies how much your enterprise is worth and how well it will do in the future.
4. To assess the chances of the enterprise and make necessary correlation before starting the business so as to increase your possibility of success.
5. To promote and market your enterprise.
6. To minimize risks by preparing a plan that will guide the operation of your enterprise and serve as a continuous reference.
7. To show how you will achieve your business goals and objectives.
8. To promote and market your enterprise (Reference: FAO-Seed; Afghanistan Manual).
What are the components of a business plan?
Introduction: describes what kind of business the group is dealing with; the crop and
variety of seed that your business will produce, why the choice for this seed is a good one and who will be your clients.
Group information: mention LSB name, the name of your business, location/address. Product description: gives more details on the crop and varieties that you plan to
multiply, the measures for quality control that will be set up, the packaging… Explain why your seed are special. Basically it describes the value proposition of the LSB.
Business target: This comes from your vision and mission. It should be SMART (smart,
measurable, realistic and time bound). The business target should be agreed upon depending on the capacity of individual farmers (resources such as land, skills, experience etc.)
Example: By the end of next year our group will have sold 20 tons of quality rice to a buyer with a contract at a price of ugx 2000 per kg
Production and postharvest plan: This explains the product to be delivered to
customers, the technology that will be used to produce it; the inputs to be used in producing the desired quality product (varieties, fertilizers, and how much of each). Maintenance of capital assets, Explanation of how you will deal with postharvest handling must be part too.
Budget for purchase of inputs during production
Marketing and sales plan: Who are LSB current customers? Who are the new customers
that you intend to sell the product to? Where are they located? What is the market size? Is demand tending to grow or decrease? Who are your competitors and what will be their reactions when you start the production? How are you going to sell your products? How are you going to promote your products and why your promotional methods will succeed? Which distributional channels are cost effective in your seed business?
Financial plan/needs: What are your financial needs to launch the business and sustain
it for a full year? In case you would need a credit, how much and for what purpose? What guarantees can you provide in order to obtain a loan?
Table showing the financial requirements of Kyazanga Farmers’ Cooperative Society Limited:
Fixed assets: Amount UGX
Store construction 110,271,600
seed mixer/ cleaner 5,000,000
Tarpaulins( 50) 3,500,000
Land 15,000,000
Working capital: Amount (USD)
Processing/packaging 5,000,000 Transport/marketing 7,000,000 Communication 1,000,000 Utility bills 800,000 Salary/ remuneration 9,800,000 Equipment/ maintenance 900,000 Office cost 600,000
Total investment needed (UGX): 158,871,600
Management plan: This section is exclusively about the internal resources and processes
needed to produce the product or service and managing the social enterprise. It shows
Item Quantity Cost/unit Total cost
Seed Chemical fertilizers Organic fertilizers Fungicides Pesticides Inspection costs Bags
good opportunity to plan and outline the details of running the enterprise and it is a critical step in ensuring successful implementation of business
Business plan template for group (refer to CIAT Handbook Chapter 5). This should be as simple as possible and depending on the level of growth of the LSB; it can be adopted and adjusted accordingly.
Training methods
Q: What is important concerning planning for the seed business
Q: Ask participants to share their experiences concerning business planning both in groups and at household level?
Depending on the answers given above; ask the following questions; Q: What is a business plan?
Q: Who has used or developed a business plan before? What was the experience in using it?
Present the content on business plan and its importance. Allow questions from participants.
Introduce and describe in detail business plan components to the participants. Present the content
Provide the LSBs with a template of a business plan. Go through the different sections with the group members. (Design one, integrate it and simplify it) Group work: Divide the participants in small groups and let them begin filling in the
template of a business plan preparing at group level (Allow them four hours). Select some participants to fill in the business plan template at group level
Plenary: The individual small groups present the parts of the business plan they have worked on. These are later harmonized to make a complete business plan for the LSB. Comments should be given and key LSB members should be nominated to complete the business plan on behalf of the others.
Materials:
Flip chart, markers, templates of business plan (both at individual and group level)
Advice to facilitator
Remind them that a business plan can be made at both a household level and group level.
The Business plan should take care of the interests of both men and women in the LSB.
Prepare a template of a business plan for the group exercise.
During implementation, business plans should be checked and updated (aspects on gender responsiveness, realism of the business plan should be assessed)
Resources
CIAT handbook 5.2; (pages 1-8), Afghan Seed Manual (pages 40-61), Source: Rwanda Seed Entrepreneurship Manual (session 4)