BUSINESS PLAN FOR HOT PEPPER BUSINESS

TYPE OF BUSINES: PROCESSING OF PEPPER TO POWDERED FORM.

BUSINESS IDEA

The business is to process red hot pepper and market it in powder form. The pepper would be
purchased in large units, dried, powered, packaged and sold to supermarket, restaurants, hotels etc.
in small, medium, and large plastic sachets.

THE INNOVATION

Pepper is grown majorly in Kaduna, Kano, Jigawa, Kastina, Sokoto, Plateau and Bauchi state
respectively. The following innovations will be implemented by the business:

* The raw pepper will be passed over hot steam to maintain its red color before drying.

* The pepper would be dried on a drying pad sealed off from straying animals or human beings.

* The product would be ground in an engine powdered machine under safe and hygienic conditions.

* No colorings or additive shall be added as is usually the case with grounded pepper sold in the market.

* Workers in the processing room will wear mask and gloves during the process.

* The powder would be packed in a plastic sachet.

* The product will be certified by NAFDAC.

OPERATIONAL PLAN

The operational plan is based on the seasonal calendar during which pepper is grown i.e from January,
February, March and also October, November, December.

ACQUISITION OF THE PRODUCT

The pepper would be acquired from either Mile 12 or Iddo market. The medium sized basket of fresh
pepper (Tatase) cost #11,000 and Chilli pepper (Rodo) goes for #13,000.
PROCESSING

*GRINDING- The dried product will be ground into fine powder in an engine powered machine. Again,
this phase of the exercise will be conducted under maximum hygienic conditions. Personnel’s will use
nose and face mask in addition, they will have their heads covered while working. Grinding of the
pepper will be done after thorough drying.

* PACKAGING AND LABELLING

The product will be weighed on a scale to determine the different weight categories. There will be
initially packets of 15gm and 40gm. These will be sealed in plastic sachets with logo, label, date of
production and date of expiry.

MARKETING PLAN

*MARKETING- The product will be sold within the location of Lagos to various potential buyers including
restaurants, hotels, super-market, and local cookery seller’s etc.

*PROMOTION- Promotions will be done through jingles and talk shows on radio and TV, street adverts,
through megaphone and fliers. Promotion will also be done through distribution of samples to the
general public. The marketing campaign will focus on the concepts of local products carrying strong local
flavor and being unadulterated and safely packaged.

FINANCIAL PLAN

*CAPITAL COST

ITEMS QUANTITY UNIT COST TOTAL COST USEFUL LIFE MONTHLY

DEPRI.
GRINDING 2 10
MACHINE
DRYING 2 1042560 2085120 10 868800
MACHINE
PACKAGING 2 1724400 3448800 10 1437000
MACHINE
DIGITAL SCALE 2 10
CERTIFICATION 1 10000 10000
STANDARD
BUREUA
GENERATOR 1 90000 90000 5 1500

TOTAL 2866960 5633920 1014000

FIXED COST

UNIT TOTAL
ITEMS QUANTITY COST COST
LOCAL GOVERNMENT
LEVIES 1 5000 5000
LABOUR 15 10000 150000
DEPRECIATION 1014000
SALARIES 12 120000 1440000
UTILITY BILLS 12 6000 72000
ADVERTS AND
PROMOTION 12 5000 60000
RENT
1year 450000 450000
ADMIN EXPENSES 12 10000 120000
STATIONARIES 12 4000 48000
CONTINGENCIES 12 10000 120000
TOTAL 3479000

VARIABLE COST

ITEMS QUANTITY UNIT COST TOTAL COST

RAW MATERIAL
PACKAGING MATERIAL 12 30000 360000
TRANSPORTATION
REPAIR AND MAINTENANCE
CONSUMABLES 12 5000 60000
ELECTRICITY 12 6000 72000
GENERATOR RUNNING COST 12 25000 300000

COST BUDGET SUMMARY

NO SUB HEADING TOTAL

1 CAPITAL COST 5633920

2 FIXED COST 3479000

3 VARIABLE COST 792000
GRAND TOTAL 9904920
DEPRICIATION

ITEMS COST USEFUL LIFE (yrs) MONTHLY DEPRI.

DRYING MACHINE 2,085,120 10 17,376.00

GRINDING MACHINE 10
PACKAGING MACHINE 3,448,800 10 28,740.00

GENERATOR (5.5KVA) 550,000 10 4,583.33

FURNITURE 100,000 10 833.33

TOTAL DEPRICIATION 51,532.67

FIXED AND SEMI-VARIABLE COST

Depreciation 51,532.67

Rents 450000

Electricity 72000

Salaries 1440000

Building Maintenance

Waste Disposal

CALCULATION OF PROFITABILITY ASSUMPTIONS BASED ON THE CURRENT/ACTUAL MARKET PRICES.

It is assumed that, 300kg raw pepper when dried would yield 80kg dry pepper. Therefore, 600kg raw
pepper would yield 160kg dry pepper. 50gram powdered pepper sells at #60 therefore,
160kg=160*1000=160,000grams

160,000/60=3200*60=160,000

Therefore 160kg dried pepper when ground will make a sale of #160,000
DETERMINING THE BREAK-EVEN POINT

Based on the above for 160kg…..

In one year a total sales turnover is projected at #1,920,0000 for pepper

For 5yrs, the annual gross sales are expected to be #9,600,000. With this projection, a break-even point
shall be reached with the sales of the product at the third year that is April/May 2021.