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| AFRICABIZ
VOL 1 - ISSUES: 87 & 88
JULY
15 - SEPTEMBER 14, 2006
Previous
Issue
Editor: Dr. Bienvenu-Magloire Quenum
Click here for contact & support console
| | A
WORD FROM THE EDITOR
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Dear visitor and international investor,
We
warmly welcome you, if this is
your first visit to Africabiz
Online - The ultimate newsletter
on trading and investing in 49
sub-Saharan African countries.
If you are a regular and faithful
reader, welcome back.
- THIS DELIVERY STANDS FOR TWO ISSUES
Africabiz Online's editorial team is taking one month break from August 15 to September 14, 2006. Therefore, this delivery covers two months: July 15 to August 14 - Issue N° 87; and August 15 to September 14 - Issue N° 88. The next issue N° 89 will be online on September 15, 2006.
- TO MANAGE A PROJECT, AND NOT JUST TO SUPERVISE
In continuation to previous deliveries [75, 76, 78, 80, 81, 82, 86], we introduce, starting with this issue, an article about Project's Management.
This is really a vast subject that had been covered by thousand of books written by academic people, businessmen and businesswomen and professionals around the world - without ever closing the debate. Indeed, the matter is big and vast, extending into several areas of human life and behaviour: economics, human resources, politics and sociology.
Nevertheless, in line with Africabiz's main objective that is to discuss and debate about "How Emerging Countries Could Bridge the Developing Gap", we will endeavour to sum up and deal with the subject in three successive deliveries, and few thousand words - focusing on the management of developing projects.
This issue is Part I of the series and is titled: - Project Management: Definitions.
That will be followed by:
- What a Project that has the Potential to be a Success looks like?
- To Manage A Project to a Successful End And Not Just to Supervise.
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Part I: Project Management: Definitions is here to review
- NEW PAY-PER-CLICK ADVERTISEMENT PLATFORM: ALIBABA SEARCH ENGINE
List of Products and Solutions to trading and investing in and out emerging nations - and particularly in sub-Saharan African nations - is here to review.
We draw your attention to Jobs & Projects'
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the best experts to carry out projects at very competitive costs,
and, second, job-seekers to publish for free Résumés/CV to attract project-owners attention.
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Contributor's Guidelines
are here to review. Your contribution on "How emerging nations and particularly African countries
/ entrepreneurs could bridge the developing gap" is welcome. You may visit
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Online Interactive to comment about articles posted in Africabiz
Online.
Many thanks for dropping by and see you here on September 15, 2006.
Dr.
B.M. Quenum
Editor
of AFRICABIZ
 | | |
| BUSINESS
OPPORTUNITIES IN AFRICA
| |
-
Several business opportunities - component parts of the Integrated Developing Scheme described in Africans, Stop Being Poor! are listed in following table.
| a-
SHEA BUTTER (5,
6, 7,
11, 12,
13)
b- BLUE GOLD (14,
15, 16,
17, 18,
19)
c- FREEZE-DRIED PAPAIN (20,
21, 22
and here)
d-
KENAF (23,
24)
e- VEGETABLE OIL (25,
26, 27,
28)
f- CEREALS (30,
31, 32,
33)
g- FRUITS (34,
35, 36,
37, 38,
39, 40,
42, 43,
44, 45,
46)
h- ESSENTIAL OILS (47,
48, 49,
50, 51,
52)
i- ROOTS & TUBERS (54,
55, 56,
57, 58,
59, 60,
61, 62,
63, 64)
j-
FOWL BREEDING (66,
67, 68,
69, 70,
71, 72, 73, 74, 75, 76)
k- FISH FARMING (78, 79, 80, 81, 82, 83, 84, 85, 86, 87) 89 |
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-
FISH FARMING AS BUSINESS OPPORTUNITY: PART
X - THE IMPACT OF MASS PRODUCTION ON PROFIT-MARGIN - THE ECONOMY OF SCALE.
We will conclude the series on Fish Farming considering the economics of a medium-scale operation to smoking fresh tilapia and catfish.
The purpose of the exposé is to show the impact of "mass production" on profit-margin or the effect of the economy of scale. Further, this brief study will highlight the paramount importance to drafting a Business Plan before starting a venture.
Operating conditions
Operating conditions are similar to the ones used for the small-scale smoking operation but to transform fivefold the quantities of tilapia and catfish, that is 4,500 kg of tilapia and 4,500 kg of catfish daily.
The following table summarizes the operating costs:
| Operating Inputs & Costs |
| Inputs |
Daily |
Monthly (24 days) |
Yearly |
Yearly costs (US$) |
| Tilapia (kg) |
4,500 |
108,000 |
1,296,000 |
2,072,000 |
| Catfish (kg) |
4,500 |
108,000 |
1,296,000 |
2,332,800 |
| Brinning mix (liters) |
3,600 |
86,400 |
1,036,800 |
210,000 |
| Gas-Propane (kg) |
149 |
3,577 |
42,926 |
7,980 |
One dual (wood and propane gas) powered AquaTech equipment (RS-300) was used to smoke 1,800 kg of tilapia and catfish daily (for more consult issue 86). That means the medium-scale operation would require five Aquatech RS-300 smoking-equipments.
- ECONOMICS BRIEFS ABOUT THE MEDIUM-SCALE OPERATION
Based on previous preliminaries [84,85,86] one has the following table that summarizes the operation's economics:
|
US$ |
|
INVESTMENTS
|
Production Space Layout: cold room, preparation space, brinning tanks, smoking area, storage space for finished products - 300 sq. Plus 200 sq meter space for workers cloakroom. Shelter for propane-gas containers. Small office space. Etc |
50,000 |
Production equipment: Four 1,000 liters content water tank; 36 (100 liters content) plastic basins to brin 250 kg (each) of fresh fish per 24 hours; One fork-lift to transport the basin to the smokers; five AquaTech dual powered (propane gas and fuel-wood) RS-300 smoking-apparatus; plus sets of knives. Etc |
45,500 |
Other Production Equipment and Inputs: One pick-up car; handling equipment, 100 small five kg content plastics basins to handling wastes (fish blood, scales and gutting wastes), plastic overalls for workers, soap bars and scrubbers. Etc. |
27,500 |
Total investment |
123,000 |
|
OPERATING COSTS
|
Operating Expenses: to producing 1,760 metric tons of smoked tilapia and 1,985 metric tons of smoked catfish and 300 kg of wastes (dried bowels and blood, crushed scales that could be used for animal feed formulation) including 45 workers salaries and wages. |
4,650,000 |
| PRODUCTION COSTS |
1,985 metric tons of smoked catfish (weighting each 298 gram. in average (click here for more about the weight of the fresh fish.) That is 6,661,074 smoked catfish per year for 2,325,000 US$ production costs. That gives a production cost per fish equals to .350 US$ or per kg. of smoked catfish = |
1,174 |
1,760 metric tons of smoked tilapia (weighting each each 128 gram. in average (click here for more about the weight of the fresh fish.) That is 13,750,000 smoked tilapia per year for 2,350,000 US$ production costs. That gives a production cost per fish equals to .171 US$ or per kg. of smoked tilapia = |
1,335 |
| GENERATED REVENUES |
| Catfish: 1,985,000 x 1,820* US$ = |
3,612,105 |
| Tilapia: 1,760,000 x 1,800* US$ = |
3,150,000 |
| Total = |
6,762,105 |
| GROSS PROFIT |
| GROSS PROFIT |
2,112,105 |
Fifty-five percent profit margin had been applied to catfish's cost of production and thirty-five percent to tilapia's one having in mind taxes and other levies that the company would have to pay.
- THE EFFECT OF THE ECONOMY OF SCALE ON PROFIT-MARGIN
Table below shows the production cost for each fish specie in small and medium-scale operations. One notices that catfish's production costs decrease from US$ 1,208 (small-scale operation) to US$ 1,174 (medium-scale). That is twenty-eight percent decrease. For tilapia, the decrease amounts to thirteen percent. These diminutions reflect the positive impact of mass production on productions' costs.
| PRODUCTION COSTS / MEDIUM-SCALE OPERATION |
1,985 metric tons of smoked catfish (weighting each 298 gram. in average (click here for more about the weight of the fresh fish.) That is 6,661,074 smoked catfish per year for 2,325,000 US$ production costs. That gives a production cost per fish equals to .350 US$ or per kg. of smoked catfish = |
1,174 |
1,760 metric tons of smoked tilapia (weighting each each 128 gram. in average (click here for more about the weight of the fresh fish.) That is 13,750,000 smoked tilapia per year for 2,350,000 US$ production costs. That gives a production cost per fish equals to .171 US$ or per kg. of smoked tilapia = |
1,335 |
| PRODUCTION COSTS / SMALL-SCALE OPERATION |
397 metric tons of smoked catfish (weighting each 298 gram. in average (click here for more about the weight of the fresh fish.) That is 1,332,214 smoked catfish per year for 475,000 US$ production costs. That gives a production cost per fish equals to .360 US$ or per kg. of smoked catfish = |
1,208 |
352 metric tons of smoked tilapia (weighting each each 128 gram. in average (click here for more about the weight of the fresh fish.) That is 2,750,000 smoked tilapia per year for 475,000 US$ production costs. That gives a production cost per fish equals to .173 US$ or per kg. of smoked tilapia = |
1,349 |
Table below compares Gross Profit generated by both operations:
| GROSS PROFIT / MEDIUM-SCALE OPERATION |
| GROSS PROFIT |
2,112,105 |
| GROSS PROFIT / SMALL-SCALE OPERATION |
| GROSS PROFIT |
434,396 |
One notices that for an increase of investment from US$ 81,000 (small operation) to US$ 123,000 (medium operation) - that is 51.8% - the resulting Gross-Profit jump from US$ 434,395 to US$ 2,112,105 that is an increase of 386%.
- THE IMPORTANCE OF A COMPREHENSIVE BUSINESS PLAN
Above remarks and observations highlight the importance of business planning before starting a new venture. Without a business plan, the investor cannot have a good estimate of the respective cost of production of the different species of fish. He cannot therefore know which profit margin to apply to have a competitive selling price, pay taxes and keep the Cash Flow evolution in the green.
You can observe the tinniest changes that occur in the production costs when one consider a small-scale operation versus a medium-scale one. These changes, as small as they may look, are of paramount importance in a tight competitive marketplace!
Indeed, the manager that have access to these figures is better equipped to tackle the operating costs. He would know where to slash inputs' purchasing prices to remain competitive should any unforeseen event occur that disturb the production line.
However, as here explained, a "static" business plan is not enough either. It is compulsory to have a Control Board that is a dynamic business plan, which results from steady revision and updating of the initial static business plan (quarterly for instance) to know for sure the exact figures with regards operating expenses and Cash-Flow's evolution.
Without a comprehensive business plan to start with and a dynamic one as a Control Board, a manager, whatever maybe his outstanding managing-skills, cannot accomplish miracles. For the simple reason (a paradox) that the management skills of the project's manager is not the prerequisite for the potential success of a project. as here briefly exposed
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