2018-2027

WHIMZ Ice Cream Business Plan

Kevine Otieno
Dairy Technologist
© 2017
Read This First
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your business.

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This sample plan remains the property of dairytechnologist.com. We wish you all the best
in your business.

Best regards,

Kevine Otieno.
Dairy Technologist.

DAIRYTECHNOLOGIST.COM 1
 Executive Summary

WHIMZ Ice Cream was born out of a class room project at Egerton University. Its
unique proposition is the use of natural ingredients (sourced locally) and custom
manufacturing to suit individual preferences.

The business currently runs from a rented facility in the suburbs of Nakuru
town. This gives the product easy access to the large market whose majority is
youth with medium to high education. These tend to frequent hotels/restaurants
and recreational joints to catch up with friends and seek new opportunities.

WHIMZ targets hotels, restaurants, and recreational joints as the main

customers. These will be able to purchase ice cream in bulk, making it easier for
us to cut costs on packaging and get assured repeat customers.

Our packaging for the major customers will be done in 12L buckets/pails while
small resellers and direct consumers will get our products in smaller packaging
containers of 5L, and 500ml respectively. Each of these will have a sticker with
details of nutritional value, ingredients and our contacts.

We have set our maximum capacity at 100,000L of ice cream per year by the time
we reach our fifth year. Our retail prices for the ice cream will be as follows:

 12L – Ksh. 4,300

 5L – Ksh. 2,300
 500ml – Ksh. 170
By the end of 2018, we intend to sell 22,000L of ice cream. Being a team of three
strong willed individuals, we are certain we’ll pull this through. To actualize this
vision, we require an initial financial outlay of Ksh. 14,914,000. Our business is
currently valued at Ksh. 1,895,211 with an internal return rate of 23%.

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 Table of Contents
Preface................................................................................................................................ 0
1. The Overview ............................................................................................................... 5
Whimz Ice Cream Business Overview................................................................ 5
Current Processing Facility and Products .......................................................... 5
Current Customers ................................................................................................ 6
Our Vision ............................................................................................................... 6
Our Goals and Objectives .............................................................................. 6
Overview of the Kenyan Ice Cream Industry .................................................... 6
2. Operations Plan............................................................................................................ 8
Projected Development Plan for WHIMZ .......................................................... 8
Planning for the Facility Establishment....................................................... 8
Strategic Development Plan .......................................................................... 8
Building and Floor Plan ........................................................................................ 9
Plant Setting ..................................................................................................... 9
Work Plan and Flow of Work ............................................................................ 11
Processing and Workflow............................................................................ 12
Quality Control..................................................................................................... 14
The Capital Expenditures ................................................................................... 14
Pan for the Working Capital and Management .............................................. 15
Cost of Goods Manufactured ...................................................................... 15
Cost of Goods Sold........................................................................................ 16
Administration, Marketing, and General Expenses................................. 16
Working Capital Planning and Management ........................................... 16
3. Human Resources Plan ............................................................................................. 20
Organizational Structure..................................................................................... 20
Job Descriptions.................................................................................................... 21
Owners............................................................................................................ 21
Procurement Manager.................................................................................. 21
Production Manager ..................................................................................... 21
Sales & Marketing Manager ........................................................................ 22
Compensation....................................................................................................... 22
Training Programs ............................................................................................... 23
4. Marketing Plan ........................................................................................................... 24
4P’s of the Marketing Mix................................................................................... 24
Product ........................................................................................................... 24
Pricing ............................................................................................................. 24
Promotion....................................................................................................... 25
Place ................................................................................................................ 25
SWOT Analysis .................................................................................................... 26
Market Analysis ................................................................................................... 28
Past Performance........................................................................................... 28

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 The Industry................................................................................................... 28
Competitive Analysis ................................................................................... 29
Customer Analysis & Segmentation .......................................................... 30
Target Markets............................................................................................... 30
Why Our Products ........................................................................................ 31
Our Opportunity ........................................................................................... 31
Marketing Strategy .............................................................................................. 32
Major Assumptions....................................................................................... 32
Sales and Profit Objectives........................................................................... 32
Our Strategy................................................................................................... 33
Our Channels of Distribution...................................................................... 33
Our Pricing Policy......................................................................................... 33
Sales and Marketing Strategies ................................................................... 33
5. Financial Plan ............................................................................................................. 35
Economic Forecast ............................................................................................... 35
Financial Performance Overview ...................................................................... 35
Financing Budget ................................................................................................. 36
Business Financing Options ........................................................................ 36
Dividend Policy.................................................................................................... 37
Unit Cost of Production ...................................................................................... 37
Analyzing our Risks ............................................................................................ 37
Critical Variables for Production ................................................................ 37
Break Even Analysis ..................................................................................... 38
Best, Base, and Worst Case Scenario Analysis.......................................... 38
Our Contingency Plans ................................................................................ 39
6. Conclusion .................................................................................................................. 40

List of Tables
Table 1: Capital Budget for Whimz ............................................................................. 14
Table 2: Cost of Goods Manufactured ........................................................................ 15
Table 3: Cost of Goods Sold.......................................................................................... 16
Table 4: Working Capital .............................................................................................. 16
Table 5: Human Resources Budget.............................................................................. 22
Table 7: SWOT Analysis................................................................................................ 26
Table 8: Financial Results (WHIMZ) ........................................................................... 36
Table 9: Unit Cost of Production.................................................................................. 37

List of Figures
Figure 2: Flow of Ice Cream Production Diagram .................................................... 11
Figure 3: Organizational Structure .............................................................................. 20
Figure 4: Competitive Positioning for Ice Cream Companies in Kenya ................ 30

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 1. The Overview
Whimz Ice Cream Business Overview
Whimz Ice Cream is a partnership of three Egerton University alumni. It was
created in 2014. Started as a class project, it later transformed into a business
when the owners noticed that their business offered a unique value to the
consumers. In fact, it was the level of demand of the product from the student
body that made the owners realize that they were in business.

With the increasing consumer base, the owners continued to add different fruit
flavors, having begun with strawberries and pineapple flavors. The business has
since grown into a self-sustaining unit, sometimes getting more orders than they
can deliver.

Current Processing Facility and Products

Currently, WHIMZ ice cream products are manufactured from a rented facility
in the outskirts of Nakuru town. All the fruits are sorted, and processed at the
facility. The ice cream mix formula that we use for making the ice cream is
prepared by Brookside Dairy Limited according to our formula. We currently
make five natural fruit flavors of ice cream. These have received tremendous
feedback from our customers.

Value addition to the fruit helps improve the quality of the end product and
lengthen the storage life. This helps cut losses while enabling us to sell premium
quality product that our clients will love. The hotels and restaurants buy from us
in bulk and sell the ice cream in their meals and as take-away ice cream cones.
Small retailers also buy in large quantities and resell as ice cream scoops.

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 Current Customers
Restaurants and hotels in Nakuru town form the bulk of our customers. We have
had a very positive response and corporation from them. Small shops from the
town and hawkers also buy from us regularly giving us a healthy cash flow.

Our Vision
Our vision is to be the best premium quality ice cream company in Kenya. We
plan to achieve this by adding the best quality to our natural fruit ingredients.
We want to be the ice cream brand that every person would reach out in the shelf
for; the yard stick for excellent quality ice cream.

Our Goals and Objectives

We are on a mission to be the best ice cream company in the region. To achieve
this grand vision, we know we’ll be required to work very hard. Luckily, we
have a grand plan.
Here are the objectives that will propel us to achieve the vision:
 To marry fruit production with dairy production by using the fruit to add
value to ice cream. We want to be the ice cream company that people use
as an example when they think of ice cream.
 To explore the possibility of creating a limited liability company,
(WHIMZ, LLC). We are looking to be fully fledged in the future;
manufacturing everything for ourselves. This will eliminate the need to
source ingredients (like ice cream mix) from other manufacturers.
 To increase our customer base beyond Nakuru. Increasing our customer
base will allow us to expand our manufacturing plant.

Overview of the Kenyan Ice Cream Industry

In Kenya, much like in many other places around the world, ice cream business
is pretty much recession proof. This is because ice cream is a treat that everyone

DAIRYTECHNOLOGIST.COM 6
looks forward to having sometime in the near future. The market is pretty stable,
even though the market share is still very minimal due to lack of product
awareness. Much still needs to be done in terms of marketing to increase product
awareness among many Kenyans.

For the longest time, manufacturers have been making three major flavors of ice
cream (that is vanilla, strawberry and chocolate). However, the recent health
awakening has created an awareness of healthy foods, making it necessary for
manufacturers to think natural additives such as real fruit.

Luckily, not many local manufacturers have picked up this trend. We, being the
early adopters of the real fruit infused ice cream in the country stand a better
chance of acquiring a huge market share. Given the kind of feedback we get from
our current customers, we know the business is headed to the right direction.

The local ice cream consumption per capita is quite low (less than 1L per person
per year according to data from Euromonitor International). In 2015, 750,000L of
ice cream was manufactured in Kenya, this being 8% increase in production from
the previous year. The increasing numbers of young upward mobile urban
dwellers is a good indication that the consumer base is increasing. Interestingly,
Kenyans are very receptive to new trends. We believe our new line of ice cream
brands will be no different since it has health benefits to the consumers. We
predict a very strong market for our products because Kenya has the sun all the
year round, so, we are sure we will be getting customers every single day.

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 2. Operations Plan
Projected Development Plan for WHIMZ

Planning for the Facility Establishment

We plan to acquire a piece of land in the outskirts of Nakuru town to erect the
manufacturing plant to enable expansion of the company to the required
standards. Zoning the plant outside the urban area will help us reduce costs
associated with taxing and to help us assure security of the facility.

We have already identified a piece of land within Njoro district, which we are
planning to purchase for this development. Negotiations are already underway
to see if we can reach an agreeable disposal value. At the same time, we are
pursuing the necessary paperwork that will be required for this project.

Strategic Development Plan

We have set in place a robust development plan for WHIMZ for the next 10
years. We are foreseeing a situation where the demand for the products will
grow exponentially year by year due to the unrivalled quality in the region. As
you will see from our financial projections, the first year will not be profitable
due to the extensive capital expenditures for laying out the plant. Again, the first
year will be our time to do active marketing and brand awareness to increase our
market share.

To cut down on costs of operations to manageable levels, the three partners will
be the only employees of the company in the first year. As the business will be
growing and requiring more attention, other employees will be hired on need
basis.

DAIRYTECHNOLOGIST.COM 8
The projected rate of growth of the company means that the company will reach
its full capacity by the fifth year of operations. At that time, the company will be
utilizing its full capacity and profits will come from lean operations. Quality is a
key issue at WHIMZ. We will ensure that we implement a robust quality control
program that takes into account all the associated hazards and critical control
points to minimize/ or stamp out risks. We are aiming at nothing short of the
ISO standards. In fact, we aim to achieve ISO certification by our 5th year of
operations.

Strategic plans have also been set in place to ensure that we acquire a large
amount of land for possible future operations. We are laying out strategies to
install a walk-in freezer for the storage of the products for easy future expansion
plans. We foresee a time when we will be getting contracts to supply our brand
of ice cream to international hotels and airlines. This will require large capacity
for which we are not taking any chances lest we fail terribly.

Building and Floor Plan

Plant Setting
In liaison with a food plant engineer, WHIMZ will set up a processing facility in
the acquired piece of land to facilitate efficient and quality assured processing.
All the standards of a food processing facility will be considered when setting up
the plant. We have settled for a galvanized stainless steel facility due to hygiene
and durability.
The facility will have all the necessary utilities and a proper waste management
system. The building will have designated areas for processing, handling, and
storage of both the materials and the finished product. All the necessary plant of
the needed capacity will be installed to facilitate processing and storage. There
will be a loading and offloading platform to facilitate smooth flow of raw

DAIRYTECHNOLOGIST.COM 9
materials and finished products. The offloading platform will be adjacent to the
cold room to ease access.
The floor plan will be arranged such as to facilitate easy flow and to reduce
chances of contamination or cross-contamination. There will be designated
cleaning stations to maximize hygiene and to ensure that the product meets the
highest and strictest standards of quality assurance. Of course, there will be
periodic inspections by the government agencies and industry regulators to
ensure conformity.
The figure below indicates the proposed floor plan for WHIMZ. (Design removed
for proprietary reasons).

DAIRYTECHNOLOGIST.COM 10
 Work Plan and Flow of Work
Figure 1: Flow of Ice Cream Production Diagram

Sourcing Fresh Fruit

Sorting and QC
Formulation of Ice
Cream Mix

Packaging and
Sealing for Safe
Storage Procurement of
Ice Cream Mix

Freezing to Preserve Quality Ready Ice Cream Mix

QC for Ice Cream

Making Ingredients

Actual Manufacturing & Addition of Fruits

Packaging

Blast Freezing & Storage

Awaiting Dispatch to the Market

DAIRYTECHNOLOGIST.COM 11
 Processing and Workflow
1) Ingredients in Making the Ice Cream
Part 1: Processing the Fruits
Fresh Fruit
At WHIMZ, we use real fruit to make ice cream. Luckily, the fruits we use
are available all the year round. We will ensure that we process and store
enough fruits (those that usually get out of season) to ensure we have
enough stock to get us through the year. We will contract established fruit
farmers to get us the fruits at affordable price. However, we may expect
price fluctuation from time to time when our contracted fruit farmers run
out of the commodity.
Processing the Fruit
After receiving the fruits from the suppliers, we will sort, wash, peel,
cut, and pulp the various fruits according to the recipe for the different
flavors.
Then the processed fruits will be sealed hermetically in 1.2 kg bags
according to the processing batches. The hermetic seal will preserve the
quality of the fruit for longer. Of course, we’ll be storing the processed
and packaged fruit in the deep freezer at -26°C to give us the head start
of up to 12 months of storage without noticeable loss in quality.
Part 2: making the Ice Cream Mix
Our ice cream mix will use a recipe that is compliant to the Kenya Bureau of
Standards (KEBS) requirements.
Generally, our ice cream mix will contain the following parts:
Component Percent Constitution
Butterfat 10% - 16% (KEBS standards for ice cream
butterfat content: at least 10% BF but no more
than 16%.

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 Milk solids-non-fat (MSNF) 9% - 12% (includes lactose, whey proteins,
and caseins).
Sucrose 11% - 15%
Corn syrup solids 4% - 5%
Stabilizers 0% - 0.4%
Fruit 27% - 38%
Emulsifiers 0% - 0.25%
Water 52% - 61%

Essentially, for every 12L bucket batch of ice cream we make, 5.4 parts is ice
cream mix, an equivalent number of parts of air, and 1.2 parts of fruit. Charity’s
ice cream mix formula has won many hearts already. It will be Whimz’s
signature formula for entrance into the mass market. As time goes and as we
continue to get feedback from consumers in the market, Charity will continue
improving and diversifying WHIMZ’s flavors.

The biggest advantage of the formula is that all the ingredients are locally
available, which makes the cost of acquisition very affordable. We will outsource
formula mixing process to a local dairy company to help us avoid having to deal
with milk glut during rainy seasons and scarcity during dry seasons.

Subcontracting the mixing process to an established company will help us have a

stable supply of the raw material for our process without worrying about the
quality or quantity of the commodity. We estimate that the entire process will
cost WHIMZ 125 shillings per liter of the ice cream mix. This is a considerably
good deal since we do not have to invest in a milk pasteurization system.
Furthermore, we will always get the required volume of milk at the right time
and in the best possible quality.

2) Ice cream making process

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The powerful commercial ice cream making machines installed at the plant will
give us a working rate of 30L of ice cream after every 20 minutes. For a complete
ice cream making process, please read it here (http://dairytechnologist.com/ice-
cream-making-process/).

3) Package into Containers

After making the soft serve ice cream, we’ll then put it in appropriate
containers and tubs. They are then passed into the freezer for hardening.
4) Hardening and Storage in the Freezer
The walk-in freezer is set at very low temperatures to ensure that ice
cream hardens and its quality is preserved. Low temperatures below
negative 26°C will ensure that the ice cream quality is preserved and it
maintains a scoopable consistency. Proper storage will also help us avoid
some of the most common ice cream defects
(http://dairytechnologist.com/ice-cream-defects/) that affect the quality
of the product.

Quality Control
Our production manager will design quality assurance operations for the
company workers. All the workers will be trained on quality assurance and food
safety. We’ll also liaise with the Public Health office to ensure that all our
workers are certified as safe to handle food meant for public consumption.

The Capital Expenditures

Table 1: Capital Budget for Whimz
Whimz’s Capital Budget
Project/Activity Est. Cost (Ksh)

Land Acquisition and Plant Building

Acquisition of 1 acre piece of land, preparation, building and installation
of the plant (with utilities).
Total Cost 4,800,000

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 Required Equipment
Walk in Freezer (insulated) 800,000
Sink (4 compartments) 18,000
Stools (5) 7,500
1 Fruit sorting table (with conveyor) + 2 processing tables 38,000
1 ton refrigerated van 6,000,000
Assorted utensils 7,000
Ice cream making machine(s) 1,400,000
Weighing Scale 3,000,000
Vacuum Sealer 10,000
Double door cooler 60,000
Gas Stove 20,000
Total Equipment Costs 8,363,500
Total Working Capital 1,750,500
Total Capital Needed 14, 914,000

Pan for the Working Capital and Management

Cost of Goods Manufactured

We derive the cost of manufacturing based on the flavors of ice cream we’ll be
manufacturing at WHIMZ.

For starters, it’s been estimated that we’ll make 22,000L of ice cream in our first
year of operation. Since the largest batch of the product will be 12L pails, we
estimate that we’ll make about 1,835 pails of ice cream in the first year. Every
batch of ice cream will require 1.2kg of fruit for the product.

Pails and tubs will be required to hold the product during storage. Each tub
should have labelling as required by the law.

Table 2: Cost of Goods Manufactured

Component Cost Apportionment
Ice cream mix 450,000
Fruit:
Strawberry 40,000
Vanilla 36,000
Raspberry 35,000
Cherry 20,000
Pails + Tubs with Lids 70,000
Labels 8,000
Storage and Shipment 320,000
Utilities 410,000
Insurance 20,000

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 Depreciation 18,000
Accounting 60,000
Variable Overheads 110,000
Labor 650,000
Total Costs 1,797,000

Cost of Goods Sold

When calculating the cost of goods sold, we take into account the closing
inventory. It is also assumed that all the stock will be cleared by 31 st December.
However, the reality is that there will be inventory left in the stock at the close of
business year and this must be accounted for.

Our processing needs makes it necessary to have at least one week’s worth of
raw materials for making the ice cream. There will also be stock of two weeks’
worth of finished ice cream.

Table 3: Cost of Goods Sold

Cost of Goods Sold
Opening Stock 0
Cost of Goods Manufactured 1,797,000
Cost of Goods Available for Sale 1,797,000
Total Closing Stock 456,323
Cost Of Goods Sold 1,340,677

Administration, Marketing, and General Expenses

The owners will contribute towards the working capital for running the activities
of the company. To cut down the running costs, there will be need to outsource
accounting and legal services to independent professionals. WHIMZ will set
aside Ksh. 180,000 per year for the accounting fees.

The company will also set aside Ksh. 1,000,000 for marketing the first year. This
will help the company put its brand out in the market. The branding will help
cement WHIMZ’s image as the authority ice cream brand in Kenya.

Working Capital Planning and Management

Table 4: Working Capital
Object Cost

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 Raw Inventory 600,560
Work In Progress 459,900
Finished Products 350,600
Accounts Receivable 302,100
Accounts Payable 390,600
Total Working Capital 1,713,160
The breakdown of the accounts are covered in the appended tables.

2.6.4.1 Cash Management

It is predicted that WHIMZ will have a positive cash flow due to the quick
turnover of the inventory. Ice cream is a quick moving product that will not
remain stocked for long.

We expect highest sales during the festive seasons and during school vacation.
There will be steady sales from our contracted outlets such as hotels and social
joints. These will be our largest

The company will incur substantial costs in procuring and processing the fruits.
However, these costs will be justified by the premium costing structure that we
will adopt for the final product to give healthy returns.

2.6.4.2 Inventory Management

WHIMZ will keep inventory for the ice cream making ingredients (ice cream mix
and the fruits) in cold storage at the site. The average inventory for the finished
product will be 30 days to ensure that we have enough stock to meet any surge in
demand for the product.

We will also keep two months’ worth of fruit inventory to ensure that we do not
run out of supply. We will keep larger batches of fruits that are hard to find to
ensure that we are always ready to produce all the flavors, even if there is an
upsurge of orders.

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Even though sales are projected to be constant throughout the year, there will be
spikes in product demand during vacations, school holidays and when the
contracted suppliers have conventions at their premises.

2.6.4.3 Accounts Receivable

All the contracted buyers will be given a 30-day credit window. This will
facilitate easy transaction on their side and help us keep a liquid flow of cash.
Other buyers who are not contracted will pay in cash, bank deposit, or checks.

2.6.4.4 Accounts Payable

Permanent staffs will be paid monthly salaries. Contracted workers will be paid
on per-project basis.

All the utilities will be paid every month (within 18 days after receiving the bill).

Ice cream mix will be paid within 30 days of receiving the invoice. Since
defaulting on this payment attracts an interest, we will try never to default.

2.6.4.5 Cash Conversion Cycle (CCC)

We are looking to hold only 60 days’ worth of processed fruit in our inventory.
We will have a 30-day credit window for our collectible accounts and up to 30
days for our accounts payables.

Given that we will have a day’s worth of ice cream as work in progress, we will
have an average of 61 days to generate cash inflows from the inventory. This
period will be sufficient for us to pick up revenue generation since the working
capital has been set aside to start the business.

The calculation is given by the formula:

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 CCC = Average Days Inventory + Average Collection Period – Average Days
Payable

CCC = 61 +3 0 – 30

CCC = 61 days

Read more about CCC here

(http://www.investopedia.com/terms/c/cashconversioncycle.asp ).

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 3. Human Resources Plan
Organizational Structure
To ensure that we operate efficiently, we will split the company into three
distinct departments, namely:

 Procurement
 Production
 Marketing

Each of these departments will perform a distinct but synergistic role to the
overall success of the company.

There will be a chief accountant for the entire company covering all the
departments. This function will be contractual since we will need periodic checks
of our books of account to ensure that we are running a healthy business and
meeting our tax obligations as required.

For the time being, we will contract legal services and outsource human resource
services to a reputable company that can meet our needs adequately. These two
contractual posts (legal and financial advisor) are considered advisory roles
because they are not directly involved in the day to day running of the business.

Figure 2: Organizational Structure

Company Owners

Consultants/Advisory

Procurement Production Marketing

Department Department Department

DAIRYTECHNOLOGIST.COM 20
 Job Descriptions

Owners
The owners of WHIMZ ice cream form a formidable team. Ms. Charity Munga
takes the production department owing to her background in food science and
technology. She advises on production schedules, new product development,
quality assurance and related issues in that line. Mr. Jairus Kombe will be in
charge of the procurement department given his background in agricultural
economics. Mr. Manzo Charles will be in charge of the marketing docket owing
to his background in agribusiness management. The three have equal shares in
the business.

Procurement Manager
Will be in charge of all procurement needs in the company. He liaises with
suppliers to ensure that the company has stable supply of raw materials in the
right quality, quantity, and at the right time all the time. He is also responsible
for planning the acquisition of plant and equipment that is needed at the facility
to ensure sooth operations.

Production Manager
Responsible for planning operations such that we are able to utilize the plant
capacity efficiently. Will prepare ice cream recipes, do quality tests, and advice
on how to make the products better. Will plan operations to ensure that we do
not have idle time at the plant. She will liaise with our suppliers and advise them
on a formula to use when making our ice cream mix so that we are able to
maintain a level standard of quality.
Given the central role of her position, she will liaise heavily with the production
and marketing departments to ensure that the demand from the market is met.
As soon as the marketing department delivers their market orders, she will plan

DAIRYTECHNOLOGIST.COM 21
operations ahead of time to ensure that the procurement department has
procured enough raw materials to meet the demand in the shortest time possible
so that the company does not have to spend a lot of money holding stock on the
cold room. She will also plan the operations such that there is enough time to do
periodic checks in the machinery to ensure that we reduce the rate of wear and
tear. Operations should be able to run at least 8 hours a day for 4-5 days a week.

Sales & Marketing Manager

The marketing manager is responsible for converting the products in our freezers
to money in our bank account. He will prospect for marketing leads from hotels,
restaurants, shops, and institutions to ensure the company generates enough
sales leads to sustain the business and bring in healthy profits.

He creates and nurtures relations with customers, prospect for new market
segments, fixes pricing, manages logistics, and collects feedback from customers.
This feedback is useful in the production department to improve quality of an
existing product or develop a new product for a new market segment.

Compensation
The table below summarizes the human resource budget for the three
departments.

Table 5: Human Resources Budget

Budgeted Salaries and Wages Expenses

Role/Department Expenses (Ksh.)
Production 150,000
Marketing 190,500
Procurement 70,000

Wages for Casual Laborers Included per department

Total Salary Paid 410,500

DAIRYTECHNOLOGIST.COM 22
 Training Programs
All the owners and workers within the company will be required to undergo a
public health training course and obtain food handlers certificate to ensure that
the products released to the market meet the minimum standards of quality.

There will also be a need to train all the workers on occupational health and
safety to ensure that they remain safe within their work environment. An
accredited organization should conduct these trainings and issue a valid
certificate to ensure that they are alert to emergencies. When all the workers
know how to use their equipment safely, there will be increased efficiency, which
leads to reduced down time in either the human resource or machinery.

Luckily, our production manager is a graduate of food science and technology.

She knows all that is required for the production of a safe product. She also
knows how to formulate excellent ice cream recipes. In fact, the business was
born out of her revolutionary ice cream recipe that she presented for her
undergraduate project.

DAIRYTECHNOLOGIST.COM 23
 4. Marketing Plan
4P’s of the Marketing Mix

Product
WHIMZ will sell three different quantities (12L pails, 5Ltubs and 0.5L tubs). The
smaller quantities will be sold by order from the market. This will help reduce
costs associated with packaging and handling. The ice cream will be composed of
the ice cream mix, the processed fruit, and flavors.

The fruits will be bought from contracted farmers and at the local market while
the ice cream mix will be bought from a dairy processing factory according to
WHIMZ’s formula. Any other additional ingredient shall be procured on order
and as demand will dictate.

The finished product will be packaged in plastic buckets and/or tubs with
proper labels that meet the minimum requirement by law. The product name,
company logo and contact details, nutritional information, and sell by date will
all be indicated on the product label.

We currently make ice cream with Vanilla, Strawberry, Cherry, and Raspberry.

Pricing
WHIMZ will rely on a contracting model to retain regular buyers. Contracting
will assure sales and guarantee business continuity since hotels, restaurants, and
other social joints have regular traffic that will convert into sales. The
competition will be high since other sellers also target these buyers as well but
WHIMZ is stalking high on beating them due to the uniqueness of our product.

DAIRYTECHNOLOGIST.COM 24
 Promotion
Promotion will be necessary to make the brand visible in the market. Referral
marketing will be our greatest model of marketing because businesses are more
likely to believe the testimony of other businesses using the product. Personal
marketing is very powerful and will enable us to make WHIMZ the only option
that our target market should consider when they are looking for frozen
products.

We will also leverage the power of the search engine to increase our visibility.
We will strive to have our business featured in major local publications to
improve our authority and visibility online. Our website will feature our
products and have the capability to allow our clients place and track orders
online.

The search engines will be augmented with social media to drive traffic and
increase sales. Instagram will be particularly important to increase our visibility
online due to its use of images. We will feature our ice creams of different flavors
to create a catchy line for every entry to ensure that many people get to read
about us.

We will also seek to have our business featured in travel and food magazines to
help us reach out to many hotels and conference centers that can use our
products.

Place
Our primary target is the Kenyan market. We are starting from Nakuru region
due to the presence of many hotels and restaurants that offers ready market for
us. The region has fairly good transport network making it easy to deliver the
finished product to the customer in time. The weather here is also good for

DAIRYTECHNOLOGIST.COM 25
business. Many revelers who throng Nakuru town is a good opportunity for us
to sell the product easily as there is a demonstrable demand for ice cream.

Naivasha, another resort town, is also within our target market region. This will
give us a better opportunity to leverage the quality of our product when pitching
to the hotels. Once we have their businesses, it will be easier to sell the product in
faraway towns like Mombasa, Nairobi, and Kisumu. The company will be more
established with a notable brand and healthy cash flow to allow us venture into
these other markets.

SWOT Analysis
Table 6: SWOT Analysis

Strengths
 Knowledge in procurement, processing, and marketing (graduates of economics,
food science, and agribusiness management)
 Land available for expansion; easy to acquire. The place is situated in a lower tax
zone since it is out of the central business district. Transport costs are also quite
low
 Founders split costs making it a more bearable. They also motivate each other to
continue working hard on their areas of expertise
 The fruit is grown in close proximity. The local market is always flooded with
fruits at affordable prices.
 Good customer relations skills. Our customers are our biggest ambassadors as
they sell our products out of the good experience they’ve had.
Weaknesses
 High startup costs associated with land purchasing and plant building and
installation.

DAIRYTECHNOLOGIST.COM 26
 Very intense workloads for the employees, especially in the early days when the
three owners will be the sole employees at WHIMZ.
 Changing needs of manufacturing will require rapid adjustment, which may not
be financially sound due to the capital expenditures involved. For instance, the
need for the freezer may change over time even if it has been installed. It is not a
cheap installation at the plant.
 Limited technical knowhow on how to maintain the machines. A technician will
need to be put on standby to ensure that the company does not have
unnecessarily protracted down time.
Opportunities
 There is a glaring need for a premium ice cream in the market, especially for large
hotels and social joints
 We are capitalizing on the contracting model to ensure that we do not have
unnecessary competition during product influx.
 The rising trends for healthy eating in Kenya will net us many conscious
consumers who want an assurance that the product they are using is safe for their
health
Threats
 Competitors who use artificial additives will take advantage of misinformed
consumers and sell to them cheaper product. Competing on pricing will work
against our product since many people may not be particularly concerned with
the quality of the product they consume.
 Maintaining a contract is not an easy task. The client may have varying needs
med way, which may force us to install a new line, or create a new formula, or
even drop the client altogether if the demands to not add to our bottom line
 High costs associated with storing seasonal fruits. Seasonality of such fruits may
also lead to price fluctuations, which may slice our earnings.

DAIRYTECHNOLOGIST.COM 27
 Market Analysis

Past Performance
WHIMZ started as a class project when Ms. Charity created an ice cream formula
as her undergraduate project work. The panelists loved the product so much that
they asked for more. When she delivered the batch, we (her friends) realized that
we could team up and convert her skills into a sustainable business.

During the University open day of 2014, we teamed up and made a batch of 100L
of ice cream to showcase at the event. It was sold out in two hours. People
thronged our stand asking for more of the product but we had none. We were
embarrassed to turn people away because we had nothing to sell to them even
though they had the money to buy the product.

When we noticed the demand, we had no doubt in our minds that people will
definitely love the product. We started the project in a rented house at the
University’s main gate and started selling the product on order. Soon enough, we
were receiving orders from as far as Nakuru town. That is when we realized that
we had a business going on.

Given the networks that we (the business owners) have made so far, it is viable
to start a dedicated ice cream making company that will serve Nakuru and its
environs and later expand to capture the regional market. The increased market
share will boost WHIMZ’s profits.

The Industry
In Kenya, the ice cream industry is still quite young. Not very many people
consume the product (the per capita consumption of ice cream in Kenya is less
than 1L per person per year according to data from Euromonitor International).

DAIRYTECHNOLOGIST.COM 28
However, the weather is quite good allowing us to sell the product throughout
the year.

That Kenyans have embraced healthy eating will work to our advantage since
our greatest strength is the differentiation strategy we have adopted. Our unique
selling point is having the fruit in the ice cream such that the consumer can
actually tell that real fruit has been used to make the product rather than just an
artificial flavoring.

Competitive Analysis
The ice cream market in Kenya has relatively small number of established
players. This makes it easy to enter the market with a differentiated product.
Many small players can find their niche in the local market since it is still a
growing market.

Since ice cream is very elastic in terms of pricing, it is easy for consumers to
switch between brands when they feel they are getting a deal from the pricing
angle. This makes it necessary to contract large buyers to ensure brand loyalty.
Our approach to dominating the market is via providing a differentiated product
and targeting profitable establishments. Most of the patrons who frequent our
target clients’ business premises have moderate to high purchasing power. We
are assured that they can afford the product on a regular basis.

In the local market, there are not very many substitutes to this product since the
industry is still very young and is rapidly growing. Many consumers are not
aware of the wide array of frozen products. This puts us at an advantage of being
the market leader in terms of product quality in this niche market. Major
competitors include Dairy Land, Cold Stone, Azam, Lyons Maid, Nestle, and
Planet.

DAIRYTECHNOLOGIST.COM 29
Figure 3: Competitive Positioning for Ice Cream Companies in Kenya

SECTOR FOUR SECTOR THREE

Low Quality and High Price Premium Quality and High Price
(Careless manufacturers who think they (Specialty brands with a unique
can sell crap for premium. These are identifier. Usually have very loyal
those who heard someone making customers. Here is where we are going
money doing ice cream then they decide to be)
to go into the business full throttle with
no info/research & planning)

SECTOR ONE SECTOR TWO

Low Quality and Low Price Premium Quality and Low Price
(Generic ice creams. Most new entrants (Large manufacturers with very deep
target this market) pockets. They are aggressively looking
to take a large market. Usually makes
losses)

Customer Analysis & Segmentation

Our typical customers are restaurants, hotels, and social joints. In Nakuru alone,
we are targeting 35 such clients who will give us the volumes we require to make
reasonable profits. Of course, we will also be selling to ice cream stands and
shops around town. We cannot forget the academic institutions because the idea
was born out of a class project in an academic institution to begin with.

The current trend in the food industry is healthy and natural. We are embracing
these tow by using only natural ingredients in our ice cream to make it as natural
as possible. We want our ice cream to resonate well with the local market to get
brand loyalty. We will keep tweaking our formula to accommodate the changes
in the menus of our clients.

Target Markets
WHIMZ’s business model of targeting establishments will work well for the
growth of the company since there is a ready market owing to the large number

DAIRYTECHNOLOGIST.COM 30
of hotels and restaurants in the country. Of particular interest is the growth in the
tourism industry that has necessitated development of social joints and
restaurants with particular demand to the local foods.

There is a great potential in the industry owing to the strategic developments

that are aimed at opening Kenya to the regional and international markets. The
connection will allow us to market our product to the larger regional market
while still targeting large customers who take a contract with us to buy ice cream
in bulk from WHIMZ. The company will pursue and get contracts with major
hotels and restaurants across the country to ensure that we get enough market
share for sustainable growth.

Why Our Products

WHIMZ supports local economy by using the local products to make the ice
cream. We procure milk from a local dairy processor, and the fruits from local
farmers and market. Our product is supportive of the local culture of eating
whole foods that are pro-health.

Our Opportunity
The greatest opportunity we have is the current need for a differentiated frozen
dairy product with a local taste in the market. WHIMZ is offering premium
product that has all the features that the market currently needs. It is customized
to meet individual needs and our premium pricing is reflective of the
differentiation in the market.

We are particularly concerned with pursuing the chained hotels and restaurants
because getting a contract with one outlet makes it easy for us to get a contract to
supply the other branches as well. Bagging a few of such hotels (e.g. Sarova, Java,
Taidys, etc) will give WHIMZ a positive latitude in the business. We are even

DAIRYTECHNOLOGIST.COM 31
considering producing signature ice cream for each of these restaurants to make
it extremely personalized.

Personalizing the product to individual needs will cement our authority as the
ultimate ice cream brand in the country. New entrants and other competitors will
never find it easy to elbow us out because we are religiously strategic.

Marketing Strategy

Major Assumptions
1. WHIMZ’s ice cream is highly adaptable to individual needs. This is
important because the customers are looking for a product that fits their
individual needs.
2. WHIMZ is offering premium quality ice cream that is currently not
present in the market. The use of natural fruit in the ice cream is the
unique selling point for the product.
3. Our target clients know the value they want in a product and price
consideration only comes second to that quality. They are willing to pay
for the experience of a differentiated product that is tailored to specifically
meet their individual needs.
4. Personalization will help WHIMZ beat the competition.

Sales and Profit Objectives

1. WHIMZ should comfortably produce 100,000L/year of ice cream by the
fifth year of operation. This will be achieved by aggressive marketing and
setting f targets, which we must work hard to achieve.
2. We will maintain incremental sales volumes throughout the year.

DAIRYTECHNOLOGIST.COM 32
 Our Strategy
WHIMZ is going to be positioned as the premium ice cream brand in Kenya. Our
ice cream will be tailored to meet individual preferences and help our customer
design their own signature ice cream.

Our Channels of Distribution

Given the model of operation at WHIMZ, it will be easy to do the distribution of
the product. Buyers have a contract with the company and send their orders
beforehand. Fulfilling these orders is easy because the source and destination of
the product is known. This will cut out unnecessary travel time and help shave
off the associated overheads.
A refrigerated truck will be used to ferry the product from the processing facility
to the client’s premises. There will be business operation cost apportioned
towards that activity and it will add to the cost of goods sold.

Our Pricing Policy

WHIMZ uses a bulk market approach to set the price of the product. Selling in
volumes will help the company capitalize on the economies of scale production
to shave off unitary costs of the product. Each 12L buckets of ice cream will be
sold at 4,300 shillings. The buyer will decide how they repackage the product
when they sell it to the final consumer. Since our ice cream is premium quality,
the buyers can repackage and sell it at premium prices since we are selling it as
restaurant quality gourmet ice cream. They can still make excellent profits out of
the bulk purchases.

Sales and Marketing Strategies

WHIMZ has a very strategic approach to sales and marketing. Given that the
bulk of our customers are business entities who buy to resell, we have a limited
number of targets to pitch to that effect. However, we also manufacture for the

DAIRYTECHNOLOGIST.COM 33
direct consumer and small business entities to resell. The latter strategy is erratic
and highly seasonal, so, the bulk of our product will not be manufactured for this
latter segment. We are avoiding having large inventory for speculative purposes
due to the nature of the product we are dealing with.

We will heavily rely on personal sales because it gives us the advantage of

explaining all the inquiries that the customer may have. We will offer free sample
and modify the product to meet personal taste and preferences of the customer.
It is estimated that we will use 4% of our inventory for the sample
demonstrations in the first year. We will pitch individual businesses and offer to
demonstrate to them how our product gives them leverage before they sign the
contract. The contract will provide details of how much ice cream they will buy
from us each year, delivery frequency, and payment terms. This will allow us get
more ambassadors through referral marketing.

We will also create a website for the company and optimize it for the search
engine so that we can be found. We will strive to be listed on major publications
and our clients’ websites to give us more exposure. The search engine
optimization will be augmented with active social media marketing to reach out
to an even larger audience. It is estimated that we will hire a professional web
designer to create a responsive, user friendly, SEO website. Current estimates for
the cost puts the figure at 150,000 shillings.

Fliers, brochures, and banners will help us provide details about our product.
The brochures will give us an opportunity to explain why our product is the best
and give our customers an opportunity to reach out to the untapped catchment
areas. We will also strive to get published on regional and international travel
and food magazines for an even more exposure.

DAIRYTECHNOLOGIST.COM 34
 5. Financial Plan
Economic Forecast
Having priced our products at Ksh. 4300 per 12L pail, Ksh. 2300 per 5L tub, and
Ksh 170 per 0.5L tub, we have factored in the national inflation rates and interest
rates on loans. Given the annual inflation rate of 3.5% and interest on long term
loan at 9%, our pricing will be incremental after some time by a similar margin to
cushion the company from losses due to inflation.

Financial Performance Overview

In the first year of production, WHIMZ will have quite a tight cash flow due to
large inventory that is held for longer period before it converts into money since
the buyers have a 30-day credit window. Again, there will be some idle capacity
since we will not be able to utilize the installed capacity fully as we are still
getting into the market.

As sales continue to grow, profitability increases since the capacity is getting

used optimally at no additional cost. Administrative costs also remain quite
plastic as the available staff stretch their capacity to increase the output. As the
table below illustrates, WHIMZ will operate on a tight margin for the first few
years.

Costs will be adjusted upwards to take care of inflation. As the capacity nears
complete utilization, there will be need to hire additional staff on permanent
basis. Other scheduled maintenance costs for the plant and the website will have
a fixed cost, unless a complete overhaul is needed. Accidents and fault will be
covered by the insurance policy.

DAIRYTECHNOLOGIST.COM 35
 Financing Budget
Table 7: Financial Results (WHIMZ)
The 10-year Financial Plan has been intentionally removed for the obvious reasons.
Please get in touch (http://dairytechnologist.com/contact/) if you need a personalized
business plan with financial projections.

Business Financing Options

There are two plausible models for financing the business. The first being 100%
equity financing, which requires the owners to fund all the aspects of the
business with their own finances. This model provides the true internal rate of
returns value.

The second model amalgamates equity and debt funding. It can take two forms
namely;
 75% equity : 25% debt and
 4% equity : 96% debt.
In the first scenario, the company will need to stake 25% of its assets for financing
at 9% interest rate over a 10 year period. It reduces risk to entry since profits and
losses are shared according to that ratio. In any case, if the business fails to meet
its obligations, the financier will auction their share of the business.

The second scenario puts the owners of the business at a greater risk since the
cash flow will not be favorable to them. Even though they get financing almost
hassle free, they have no voice in the business. It is they are employed by the
financier to run the business. They take all the risk, do all the hard work but the
bulk of the money goes to the financier. They must consult the financier
whenever they are going to make an important business decision.

DAIRYTECHNOLOGIST.COM 36
 Dividend Policy
All the earnings of the business will be retained and re-invested into the business
until after the fifth year when the plant capacity is fully utilized. At that time,
dividends will be paid equally according to the number of shares held by each
owner.

Unit Cost of Production

Table 8: Unit Cost of Production
Unit cost calculated based on the 12L sample.
Item Estimated Cost (Ksh.)
2018 2019 2020 2021 2022
Fruit 80 85 95 100 110
Ice cream mix 550 570 600 630 650
Small components (emulsifiers, 120 120 120 120 120
corn syrup, etc.)
Packaging 600 608 617 625 630
Labor 700 740 860 920 950
Manufacturing O/H 1050 950 600 450 290
Marketing & Admin 1,700 1,400 1,250 1,100 850
Total Cost 4,800 4,473 4,142 3,945 3,600
Estimated Selling Price 4,300 4,300 4,300 4,300 4,300
Unitary Profit -500 -173 158 355 700

Analyzing our Risks

Critical Variables for Production

The local market is very sensitive to price changes. A slight shift could mean a
significant change in revenues for WHIMZ. To ensure that the company
maintains optimal performance, the production capacity must be carefully
monitored. The seasonality of some of the fruits may also affect our output.
However, we are putting in place measures to ensure that we have enough
inventory of the fruit to cover lean seasons.

DAIRYTECHNOLOGIST.COM 37
 Break Even Analysis
The break-even point is critical to our business because it shows us at what point
our business can begin making profit. All costs are covered by the available
inventory and there is no return on investment. It is the point when we can tell
how much capacity need to be utilized to get the business moving to the positive
side.

Sales volumes and pricing play a critical role in the determination of the
breakeven point. We will be able to know which variable is most likely to have a
significant effect on the revenues. Cash flow is going to be quite sensitive given
the nature of the product, the inventory period, the credit window, and the rate
of national inflation. Until we are able to utilize full plant capacity and fix
inflation, cash flow will not be stable despite the incremental sales.

Again, given the political instability witnessed during the electioneering period
in the local scene, the company may be forced to slow down production since the
big customers rely on tourists to move their volumes as well. The tourists tend to
cancel their reservations when there is political instability at the destination.

Fruit seasonality is also a factor never to be overlooked. The fruits we use to

make our premium ice cream products are seasonal and may pose a challenge
during lean seasons. However, this challenge can be surmounted by having
stocks in the inventory that can last through the lean season. The biggest
challenge with this is that it adds to the costs of holding inventory since we have
to use the freezer to preserve the quality of the fruit. This can add to the cost of
manufacturing ad increase our selling price.

Best, Base, and Worst Case Scenario Analysis

WHIMZ has been tested for the best, worst, or base case scenarios to see what
will happen when there is negative or positive deviation, and when there is no

DAIRYTECHNOLOGIST.COM 38
deviation at all. The effect on the net present value (NPV) has been projected
when there is a change in both the price and volumes of the product sold to see if
the business will be able to survive.
It has been noticed that a small deviation to the negative side will have a
significant effect on the business’ bottom line. Even though price and volume can
be moved independently with significant effect on the business, shifting both
simultaneously may have devastating effect on the business. Hence, both pricing
and sales volumes are critical to the business continuity.

Our Contingency Plans

Success of the business largely relies on the sales. Since changing the price will
have a serious effect due to the sensitive nature price evokes in the local market.
We will not be able to make a meaningful headway by changing the pricing.
However, we have a feasible route by changing the sales volume.

We already have plans to produce 0.5L ice cream tubs for the direct consumers
on demand. Selling to direct consumers and small retailers will shield the
company from undue losses or low sales volumes in case our contracted buyers
have a slow season. We will also explore the option of selling to local
supermarket chains to keep the plant running at full capacity.

WHIMZ projects an incremental growth in the first four years to reach full
capacity by the fifth year of operation. This calls for aggressive marketing, to
which plans have been made. We will consider expanding the plant by installing
additional equipment shall our expectations be met by the sales volumes. This
will also call for hiring of additional staff. On the flip side, the company will
consider shutting down the business to shave off more losses shall the sales
volumes remain plastic for the first four years, failing to reach at least 30% of the
targeted full capacity.

DAIRYTECHNOLOGIST.COM 39
 6. Conclusion
Given the numbers and the projections contained in this business plan, WHIMZ
Ice Cream is a feasible project. Careful management of costs will be prudential in
making a profitable venture out of this business plan. The strategy must be
adhered to and quality maintained at exceptional levels to beat competition and
claim a profitable market share.

Customization of food products is a new concept in the region and will be the
greatest strength to make the business successful since the customers will be
given an experience they cannot get anywhere else. This is bound to create
loyalty among the customers and build a strong local brand.

This is a 10-Year Business Plan from 1.1.2018 to 31.12.2027.

Appendices containing elaborate market research, competitor analysis, and

financial records have been annexed for the obvious reasons.

If you need a personalized ice cream business plan with market research data,
competition analysis, and all the financial records and projections, click here
to get in touch (http://dairytechnologist.com/contact/)

DAIRYTECHNOLOGIST.COM 40