Business Plan For Candle Business In Nigeria Commerce Essay

Candles have been in being for many old ages. At one clip, people depended on them to visible radiation every bit good as heat their places. Archeologists have found cogent evidence of the being of ancient tapers in caves all over the universe, most late in France. The theory is that cave mans used tapers as a beginning of visible radiation for etching their narratives and charts on the walls of their places. These tapers were most likely created from fat derived from animate beings that were killed for nutrient and pelt. Even the antediluvian Egyptians created and used tapers. Regardless of what stuff the taper is made of, to fire and supply equal visible radiation and heat it has to hold plasma, solids, gasses, and liquids.

In today ‘s modern universe, we create tapers for our ain personal enjoyment, as trades and avocations for most people. Some people enjoy doing tapers so much that they turn their trade into a profitable concern. With a small creativeness, you can do some truly alone tapers, merely by adding your ain designs and accomplishments. It is possible to do tapers in every form and size that you can conceive of, and in any colorss you can make. You can even add indispensable oils and aromas to your tapers, so that they non merely supply cosmetic visible radiation, but a beautiful aroma every bit good.

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Most of today ‘s modern tapers are made chiefly out of paraffin wax, but some are besides made of beeswax as good. Paraffin wax is a wax that is derived from workss, found of course all over the universe. Strict safety safeguards should be followed when doing your tapers. It could be really easy to do a little error and suffer serious Burnss from the wax, non to advert the really existent danger of fire, when utilizing or making tapers. There should be separate country in your place or workshop particularly for candle devising, with fire asphyxiators readily available in instance of exigency.

For a new taper devising, it will be best to get down with simple candle designs, so increase the trouble as your accomplishment additions. The basic techniques of taper devising,

hold to be learn and setup your work country suitably. Pay attending to temperatures, and do certain that you are careful to follow safety regulations.

Candle devising is reasonably easy one time when understanding the rudimentss and perfect techniques. The good intelligence is that the supplies needed in candle devising are reasonably cheap, so no concern about blowing money if ruin along the manner.

1.2 OBJECTIVE OF THE STUDY

The wide purpose of the survey is to present candle fabrication concern into Nigeria market in other to better their criterion of life.

Along this wide purpose emerges the following specific aims which are:

To find the viability of Candle fabrication concern in Nigeria market.

To find the feasibleness of Candle fabrication concern in Nigeria market.

To find the market trends for Candle concern.

Chapter TWO

MARKET SURVEY / ANALYSIS

2.1 Market

The terminal users of taper are chiefly homeowners. It is their beginning of buoy uping during power outage. As earlier mentioned ‘white garment churches ‘ ( the celestial and cherubim and seraphim ) are the other terminal users of taper for doing invocation to heavenly organic structures.

Survey of candle doing concerns revealed that there are besides other major maker of taper such as Candle Royal, Chem.-Bold, BBC Candle, star taper, China taper, to advert a few. This is a overplus of little graduated table makers. The market for candle stick is comparatively big, given the frequence of power outage and the high cost of bring forthing workss and fuel, which is a replacement for power supply. While power outage and break is common topographic point in the urban Centres, the rural electrification strategies of the authorities are bit by bit taking – away but non yet sufficient to supply alternate power. Consequently, the market for candle sticks is a assuring one while the undertaking stands a good opportunity of success.

Soon the types of taper stick produced by the aforesaid makers have been found to fire out comparatively faster than expected. From experience and research they take between 3 to 5 hours to burn- off. Reasons adduced for this is chiefly the interior content/ concentration of the thaw paraffin wax and the size of the taper sticks. This restriction and failing has resulted in the inability to fulfill bing demand satisfactorily. The state of affairs would be much more unstable when importing of tapers is stopped and demand is now concentrated on local tapers.

To better on these failings, our ain taper is being strengthened with high concentration of good, tested and quality thaw paraffin wax.

We are besides be aftering to do varied sizes of these white and colored taper sticks to provide for assorted users.

Besides, the consequence of these rivals has been examined by sensitizing the monetary value of the merchandises at 5 and 10 per centum decrease.

2.2 MARKET TREND

Given all the above it has been highly hard to find accurately significant informations which could be interpreted to uncover the tendency of demand for candle sticks at the scope in this survey for obvious grounds:

One, the candle devising industry in Ibadan, Oyo province is comparatively immature and rivals unwillingness to portion with their company informations

Second, the type of taper we envisage both in size and content is different from other rivals. Nevertheless, estimated bing production figure for all these rivals for 2008 is 2,112,000 units in Ibadan

However this figure is inconclusive if the object was for a elaborate analysis. Because of these restrictions, one is constrained to look at the ingestion tendency.

2.3 PROJECTION OF DEMAND

As before stated, because of the power outage, high cost of bring forthing workss and fuel used, taper has readily become a good option. Besides sing the alone size and content of our taper, we are of sentiment that the undertaking will hold no job in deriving entree to the market.

Information of taper ingestion revealed that in 1998, Oyo province with a population of about 3.5 million people has an estimated demand of 3 million tapers

There is hence a deficit of 888,000 units which if imported taper takes 300,000 units would go forth an bing demand of 588,000 units. This undertaking is hence assured of backing with equal publicity of the merchandise by the boosters.

THE MICRO ENVIRONMENT OF BUSINESS LOCATION

THE Economy: The Nigeria economic system was shaped, and greatly influenced by the character of the colonial economic system which was strictly exploitatory. The major urge of colonial regulation was the hunt for inexpensive and steady supply of natural stuffs for the bargaining industries in Europe foreign market for the massively produced goods mercantile establishment for excess capital and employment of inexpensive labor ( Gann and Digman ( explosive detection systems ) , 1969 ) . The natural stuffs in acute demand included cotton for fabric mills, gum elastic for types and other merchandises, palm oil, fells and tegument or leather merchandises, lumber for furniture, every bit good as mineral resources like Tin, Bauxite, Coal to advert a few. The mineral and agricultural gifts of the colonial districts, Nigeria in peculiar, were massively tapped and exploited for usage in Western Europe and North America, an development rationalized in footings of the advantage in primary merchandises. ( Onimode, 1981 ) .The a sort of symbolic dealingss between colonial districts and city was enacted which favoured the city. This procedure was farther reinforced by the export of the excess capital necessary by the demand to prolong the rate of net income and capitalist accretion in Europe. Consequently Nigeria big internal market became a major dumping land for equipment and a host of other consumer goods ( Dike 1956 ) .Successive autochthonal authoritiess in the state have tried to cope with the constrains created by the colonial economic system. However the monolithic wealth generated from the gross revenues of petroleum oil has made the economic system monoculture depending as it were on rough oil. Since oil has become a major political tool in the manus of universe powers the monetary value per barrel of petroleum oil has become vulnerable. This tendency has serious deductions on national economic growing and development. The dependence on petroleum oil besides gives rise to other economic hardships. Nigerian economic system, which was agricultural and autonomous, has become dependent on nutrient baskets from Western Europe and North America. Therefore the state has become a dumping land for all kinds of goods consumers and capital goods from these foreign states.

It was against this background that the structural accommodation programme ( SAP ) was launched in September 1986 by the Federal Military Government. The particular and major aims of SAP are ;

( 1 ) . To restructure and diversify dependance on the oil sector and economic system in order to cut down dependance on the oil sector and on exports.

( 2 ) . To accomplish financial and balance of payment viability over the period.

( 3 ) . To put the footing for a sustainable non inflationary or minimum inflationary growing. ( 4 ) To decrease the laterality of unproductive investing in the populace sector better the sectors efficiency and escalate the growing of the private sector.

POPULATION AND LABOUR ( MAN POWER ) Matters

Aside her strong economic base Nigeria is blessed with abundant human resources. Traveling by 1991 population Census Nigeria has a population of over 88 million with balanced demographic distribution. Nigeria population in absolute and qualitative footings is so appreciable compared to the remainder of African. Thus there is abundant supply of semiskilled and unskilled in peculiar every bit good as skilled labor. This has downward deduction for the cost of labor which has been one of the attractive forces for investors ( both foreign and autochthonal ) . However deserving salary and pay ordinance effected in 2007, which put the lower limit basic wage at N8, 500.00 for federal employees and N9, 500.00 for province and local authorities employees the monetary values of assorted classs of labor are lifting.

2.5 LEGAL AND SOCIAL MATTERS

Candle doing concern is non in the list of prohibited or authorities monopolies. Therefore an investor is free to get down off the concern upon finishing some legal demand. Business premises enrollment levies which involved a lower limit of =N=10, 000.00 and =N=5, 000.00 for reclamation per annum have to be met.

Similarly, adult females should be adequately represented in the house ‘s employment given the run for gender equality following Beijin conference of 1991. Grassroots engagement in the industry of candle sticks should be given a pride of topographic point.

2.6 THE POLITICAL ENVIRONMENT

The Nigeria political history is a checked one, characterized by military intercession in the power political relations of the state. The first democracy which commenced in October 1, 1960, operated a parliamentary system headed by Sir Abubakar Tafawa Balewa. The authorities was sacked in January 15, 1966, paving manner for military government for some 13 old ages regime that fought civil war ( 1967 – 1970 ) and marked by intra military alteration. On October 1, 1979 the military government handed over political power to civilian political authorization headed by Alhaji Shehu Shagari under a presidential system of authorities. By December 1983 the military junta intervened one time once more in the political relations of the county and this lasted boulder clay May 29, 1999 when the political power was transferred to the civilian political authorization headed by Chief Olusegun Cbasanjo under a presidential system of authorities in the theoretical account of Second Republic. The Nigeria multitudes are extremely mobilized and hawkish which was a radioactive dust of the revocation of June 12 presidential election won by Late Chief Abiola of the south west Nigeria. The revocation of the election consequence created socio-economic even political crises in the state. Be that at it may Nigeria political clime is going predictable and stable and the national inquiries are being eventually addressed. A government of socio-political stableness and economic advancement is guaranteed under the democratic political dispensation.

Chapter THREE

TECHNICAL Analysis

Technology DESIGN AND FABRIACATION

The technology design and fiction of taper doing equipment can be handled locally. Indisputably, the cost salvaging component is a large advantage to a new entrants into the concern, with modest capital. The design and fiction can be raised in size and edification depending on the capital available to the purchaser. Machinery and other equipment necessary for the fabrication of taper sticks are listed below.

Candle molding machine

Water pumping machine ( electrical )

Overhead H2O armored combat vehicle

Melting pot

Pail or container to pour the liquid wax into the molding machine

Combatant

Parking tabular array

The stuffs required for candle doing are as follows:

Paraffin wax ( by- merchandise of crude oil merchandise )

Candle yarn

Cooking gas or coal pot

Vegetable oil

Water

Nylon

Labels

Empty cartons

Tape/ tape cutter

OTHER CAPITAL ITEMS

office furniture and equipment and adjustments

pick up new wave ( auto )

Standby generator

Chapter 4

4.1 RESOURCES PLANNING AND COST

MANAGEMENT AND ORGANISATION

In order to guarantee effectual direction of operation, proviso should be made for the undermentioned organizational agreements:

MANAGING DIRECTOR

As the proprietor of the concern, he co-ordinates all aspects of the concern and guarantee the smooth running of the concern in all branchings.

PRODUCTION / QUALITY CONTROL MANAGER

He/ she is responsible for the production of taper sticks, to run into specification and criterions. He/she should be able to set about fix map if and when it breaks down. It is recommended that the holder of the place should hold HND or B.SC in Mechanical Engineering

Company SECRETARY/ ACCOUNTANT

The comptroller will be the fiscal offer of the company every bit good as the company secretary. He will among other responsibilities, be responsible for the undermentioned affairs:

Maintance of proper books of histories

Recognition control

Budget readying, monitoring and reappraisal

Banking and

Aid to hearers

It is recommended that the retention of the place should keep a B.Sc. Degree or HND in Accountancy or a professional making with at least five ( 5 ) old ages corporate experience.

CONFIDENTIAL SECRETARY

Should possess certification in secretarial Administration sooner Ordinary National Diploma ( O.N.D ) with proficiency in computing machine application package e.g. word processing etc and would be responsible for the typing occupations of the company and other assigned responsibilities

Machine Operator

Should possess certification in production technology sooner an Ordinary National Diploma ( O.N.D ) . he would be responsible for existent production of the taper with equal Supervision by the Production Manager.

Gross saless MEN

Should possess academic making in marketing sooner an Ordinary National Diploma with experience in selling same or related merchandises.

Administration CHAT

MANAGING DIRECTOR

Company ACCOUNTANT SECRETARY

PRODUCTION/QUALITY CONTROL MANAGER

CONFIDENTIAL SECRETARY

Gross saless MEN

Machine Operator

Clerk

Driver

Operation OF THE COMPANY

Production:

Production planning and control

Production technology

Production design and

Production aides

Accounting AND FINANCE

Accounting Policies

Company ‘s fiscal state of affairs and

Credit control system

Selling:

Merchandise ;

Pricing system ;

Distribution system ;

Promotion ; and

Other processing

Buying:

Raw stuff ;

Partss and constituents

Work in advancement

Sub assemblies

Care and fix supplies and

Other runing supplies

Forces:

Quality of staff

Recruitment and choice

Staff development and publicity

Staff public assistance

Settling disputes/ ailment and

Staff subject

4.2 Undertaking COST AND Financing

The estimated cost of candle fabrication house is =N= 2,087,000.00. This is inclusive of the cost of land and edifices, equipment, and other capital points and working capital.

Table 1 Undertaking COST SUMMARY

Land and Building COST IN NAIRA

Land acquisition and development including

Drain, landscape gardening and other development 250,000

Office and Factory Building 400,000

Sub entire 650,000

Plant and Machinery

Machines, tools and equipment for fabrication

Water chilling system 250,000

Standby generator 120,000

Eventuality cost 10 % 37,000

Sub entire 407,000

Other capital points

Office furniture equipment and adjustment 100,000

Motor new wave and Cars 600,000

Preliminary disbursal 80,000

Subtotal 780,000

Working Capital 250,000

GRAND TOTAL 2,087,000

Land AND Building

Land demand is about 1,200 sq.m for a edifice of 800 sq.m which provide for fabrication, Office care store and natural stuffs plus finished goods storage. It is expected that the modest sum is expected to construct the mill and office composite an cheap location.

Plant AND MACHINERY

The cost of machinery to to the full bring forth at 80 % capacity has been approximated at =N=407,000. This includes the fiction of the taper devising machine, H2O pumping machine and overhead H2O armored combat vehicle and the thaw pot and membranophone. Provision is made besides for a standby generator to prevent the insufficiencies in state ‘s power supply at =N= 120,000. A 10 % eventuality is besides provided for to take attention of additions in monetary value.

OTHER CAPITAL ITEMS

Provision has been made for office furniture, equipment and adjustments at a cost of =N= 100,000 and =N= 600,000 for the purchase of two vehicles i.e. =N= 350,000 for a 2nd manus new wave and =N= 250,000 2nd manus auto for running about. A proviso of =N=80,000 is made for preliminary disbursals like cost of enrollment of concern with the authorities etc.

Working Capital

Provision has been made for working capital to cover the undermentioned points

Stock of natural stuffs 6 months

Stock of finished goods 2 hebdomads

Account receivable 2 hebdomads

Operating Cost 1 month

Undertaking Financing

It is proposed that the entire undertaking cost of =N=2,087,000 be financed as follows

NATURE STRUCTURE AMOUNT %

Equity Shareholder 750,000 35.93

Working Capital commercial bank 250,000 11.97

Long term loan Development bank 1,087,000 52.10

2,087,000 100.00

Stockholders EQUITY

The needed equity of =N= 750,000 represents 35.93 % of the entire undertaking cost. This is expected to be contributed by the company boosters.

Working Capital

The on the job capital demand varies from =N=250,000 in the first twelvemonth to =N=550,000 in the 5th twelvemonth. This estimation is based on the undermentioned premises

That 6 months stock of natural stuffs will be available

That at any one clip 2 hebdomads stock of finished goods will stay

That accounts receivable will or average 2 hebdomads gross revenues

That operating cost for one month will be met.

See computation of working capital demand.

LONG TERM LOAN

=N= 1,087,000 is the long term demand which is expected to be obtained from a development bank for little graduated table endeavor ( SME ) . This is expected to run into the cost of works and machinery and to finish the mill and office edifices.

Interest Rate

Interest rate computation was based on the impression that arbitrage will be =N=7.00 between sedimentation rate and loaning rate coupled with the enforcement of senate gesture that imparting rate should come to 15 %

COMMERCIAL VIABILITY

I have examined the proposals to set up the taper doing mill in Ibadan, Oyo province and confirm that the company is economical and commercially feasible as shown in the fiscal projections.

The projection are based on the undermentioned premises

Sale prognosis and gross revenues gross

Projected income statement

Projected hard currency flow statement

Projected balance sheet

+

The followers are the high spots

Gross saless Gross

Net gross revenues are projected to increase from =N=1,200,000 in the first twelvemonth to =N=1,458,600 in the 5th twelvemonth. In line with the addition in planned production from 480,000 units of taper in the first twelvemonth to 583,440 units in the 5th twelvemonth

INCOME STATEMENT

Net income before revenue enhancement additions from =N=408,700 in the first twelvemonth to =N=564,118 in the 5th twelvemonth. This is a modest addition envisage in position of the newness of the concern and stiff competition from other companies in the same concern.

Table 2

No. Required Recommendation

=N=

Production/Quality control director 1 72,000

Coy Accountant/secretary/admin Mgr 1 60,000

Gross saless Men 1 36,000

Confidential Secretary 1 30,000

Machine Operator 2 48,000

Clerk 1 18,000

Driver 1 21,600

Entire 8 285,600

Table 3: SALES FORECASTS AND SALES REVENUE

4.3 ECONOMIC Analysis

I have been able to corroborate that the undertaking is economically feasible based on my appraisal and with economic system status of Nigeria. I have endeavoured to utilize the rudimentss tools of economic analysis in the signifier of Benefit/ cost Ratio, Net nowadays Value and internal Rate of Return ( IRR ) sense but the existent net influx of financess which will accrue to the house as a consequence of set abouting this undertaking i.e. all gross from gross revenues minus all cost, including any investing takes topographic point. No tax write-offs are made for depreciation.

Net PRESENT VALUE

The undertaking shows a positive Net Present Value of when discounted at 15 % . This shows that investing in this undertaking gives net income greater than could be got by puting the same sum at the Firm ‘s Marginal Investment rate. ( It is assumed that net income realised are withdrawn for usage by the house in any manner it chooses )

BENEFIT/ COST RATIO

The benefit/ cost ratio which is the ratio of the price reductions watercourses of benefit to the discounted watercourses of costs this shows that the benefits divisible from the undertaking outweighs whatever costs incurred if all benefits and costs are discounted to show Valuess

INTERNAL Rate OF RETURNS

The internal rate of return on the other manus is the rate of return that is being earned on Capital tied up while it is tied up after leting for recoupment of initial investing.

This was found to be 24.6 % . Given that we discounted at 15 % i.e. we assumed the cost of Capital ( involvement ) was 15 % , the undertaking would still gain a excess of 9.6 % over and above the cost of Capital while leting for all the recoupment of the initial investing. In consequence, if the rate of involvement were increased by an extra 5 % , the investing undertaking will still be economically feasible

5.3 SUMMARY, RECCOMMENDATION AND CONCLUSION

From the five twelvemonth projection made and analysis carried out, we have found that this investing in the candle devising concern here at Ibadan would be a worthwhile one.

In the first case, sing the ingestion nature of the metropolis of Ibadan coupled with the larger population of people in the metropolis, the merchandise is assured of a ready market.

In the 2nd case, holding made a market study demoing that despite the fact that many similar merchandises are available in the market, there is still an untapped market of approximately 25 % . The acute power outage and break in the face of confidences by the power and steel Minister to rectify it, non defying, the merchandise is assured of regular demand

Meanwhile we have designed some selling schemes like increasing the figure of tapers in the package to 12 alternatively of the figure 8 or 10 while still suggesting to sell at N20.00, a monetary value considered really inexpensive compared to other replacements traveling for N40 or thereabout

Other scheme is to utilize the company gross revenues new wave to travel round the province in the gross revenues publicity, i.e. traveling from one town to the other with mounted talker to make consciousness and sensitize the populace. We are every bit imagining traveling on air utilizing the province media e.g. Television, wireless and Newspaper to advance the merchandise.

On the return facet of the undertaking, the boosters and the moneymans of the undertaking e.g Bankss are assured of adequate and counterbalancing returns on their investing. With a changeless hard currency flow coupled with net income every twelvemonth for the following five old ages, the company is projected to be on the right base to carve a niche in the sector and be a possible leader in the candle devising concern.

Recommendation

We are nevertheless urging that authorities give inducements to cottage industries like our ain by supplying the enabling environment e.g. proviso of good web of roads, free fluxing un-interrupted H2O and electricity supply to enable changeless and peak production at all times.

The involvement rate could besides be reviewed down through good financial policies by the fiscal regulative organic structures to cut downing cost of funding.

As usual, authorities should implement the rigorous attachment to loaning houses commitment to little scale fabrication concerns

Inflation rate should besides be reduced or regulated to guarantee growing of little companies

Decision

This taper doing undertaking from the foregoing survey no uncertainty is a worthwhile investing and is recommended for funding.

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