What should influence your decision about how much funds to ask for in your start-up poultry layer farm business plan? Does the size of your prospective investors pockets need to be a factor in deciding what scale you start your enterprise at?
This article features excerpts from suggestions I emailed to a recent client on this theme.
It’s not just the money that concerns me, but also the experience and competence you will need “in-house” to handle the flock size to PROFITS (which is what really matters in the end!).
For instance, consider a business plan in which the poultry house will take up to 2,500 birds at P.O.L (i.e. Point Of Lay).
The question is would you be able to cope with that large a flock size in your 1st year and given your experience level (i.e. if you’ve not done it before)?
Poultry farming can be a delicate enterprise when one is still in a learning phase.
If you’re still holding down a 9 to 5 job – like more people venturing into it these days – it means you’ll have to do it part time.
You may not find it easy to to cope with day to day running for the first 15 month cycle, given that you’re still not fully free, plus you’ll be depending on a 3rd party.
My point is: the projections in a business plan are to serve as a guide. What happens on the farm may not be as straight forward.
This is why we have people who launch their poultry farms with no business plans, and they do well, while some others don’t.
The difference is often in the daily hands on management.
Handling 2,000 laying birds to make profits takes a lot more than handling 1,000.
The way I see it, you would be better off trying out for say 500 birds in one scenario and 1,000 birds in the other.
With each, you can tell prospective investors that you plan to scale up by 50% in the 2nd year.
This would be more realistic, given your experience.
Starting conservatively will often be a wise thing to do – even if you have the funds to start with twice as much
Incidentally, several of the clients I have now requesting my software told me they started with 500 to 1,000, and are now “expanding” after the 1st or 2nd year with those numbers.
Hence their need to formulate their own feed (using my ration formulator) and/or also track and trend the birds performance (using my poultry farm manager)
As your flock size increases in year 2 or 3, cost of feeding will need finer control to boost profit margins, hence you would aim to buy less commercial feed and make more of your own formulated feed at feed mills.
Doing the above will require closer hands on management that I anticipate you may need time to master from your 1st year, given that it’s your first outing.
Hopefully you see what I mean.
The concern I have is to get you to understand why your decision of scope or scale to startup should NOT be informed by how big the pockets of your prospective investor are.
Instead you should dwell on how good your chances of making a success of the venture are!
Incidentally, a smart thinking investor with integrity (e.g. one who worked hard, smart and honestly to make his money) is likely to appreciate the need to start conservatively, as being proposed here, for the first year, so you gain valuable know how and experience to scale up more profitably in the 2nd year.
This is livestock rearing my brother – profitable, but potentially risky as well!
Here’s a true story to help you put this in perspective:
A single oversight which led to an outbreak of Salmonella infection in a past client’s farm somewhere in South West Nigeria, last year left him struggling to get 25% egg laying from 4,000 birds that had been laying 70 to 80% each day for months before then!
At a point he was spending more than he was getting from them, on feeding, medication etc. And they were still dying!
Eventually, to cut the losses, they slaughtered most of them, and focused on a new batch of P.O.L they had luckily been rearing from day old.
Now imagine if he had been using investors funds and not his own money?
That unplanned setback would have delayed paying any returns to the investor.
And it happened because of
poor management e.g. birds found a way to drop from their (old) cages into the droppings on the floor and began pecking and walking around in the droppings etc!Instead of isolating them, some farm hands put those same birds back in the cages with others. This kept happening with no one thinking anything of it.
It was a disaster waiting to happen. And it eventually did, with a sudden marked drop in eggs output for about 2 weeks, followed by a rash of deaths.
My client was still in paid employment then, in a distant location – many hours away in another country. By the time I got to the farm (he asked his driver to take me down), the deep freezer was filled with hurriedly slaughtered layers!
The farm manager told me they were almost begging people to buy the frozen ones to free up space to keep more. And she was a trained graduate of agric, who had been managing the place for about 2 years (plus pigs and fish farms)!
So no one is immune to making mistakes. It’s hands on diligence that counts most, and ultimately determines success or failure with livestock – especially poultry.
And that explains why some people who did not even study agric, and who also had no business plans at startup have often succeeded in livestock farming.
They do it hands on, diligently, and take no chances – because their life savings are often invested!
My purpose here is to get you to understand that we’re dealing with living things here, which if not well handled can under perform or even die.
This is a very different scenario from investing in contract supply of imported rice, mobile phone, laptops or diesel – as you can imagine!
My role as a consultant is to offer my insights based on experience and know-how, to guide my clients in making what will hopefully be wise and profitable choices in the long run.
Once I’ve done that, my conscience stays clear.
So to round up, I’m asking you to think more CAREFULLY about what you can realistically handle to deliver profitable returns on – based on the plan I’ve given you, and what I’ve told you here.
When you succeed 1st time around, there will be an established basis on which to ask your investor to shell out more – if needed. And he’s likely to do so gladly, if the results you have to show are encouraging!
That’s how I see it: Prove yourself with a little first e.g. 500 and 1,000 as the 2 start-up scenarios.
Then you’ll be able to scale up, building on valuable experience you’ve gained – and even your investor will see good reason to go along with you.
Having said all the above…it will ultimately be YOURS to decide. If you wish to start big, go ahead.
Just be sure to proceed as carefully as possible.
Know also, that whatever you decide to do, will most likely have irreversible consequences in the end.
Hopefully, you’ll like what you get.
Good luck!
