Is this the Easiest Way to Reach 15,000 Layers in Only Five Years?

©Shutterstock Poultry farm full of white laying hens.

You have big dreams – you dream of the day when you could travel anywhere you want in the world, the day when you could go shopping without ever worrying about the price and then probably, the day when you get to provide your family with the best life money can buy. Now to achieve this lofty dream of yours, you know there is something you need – yes of course you need money and lots of it. The question now is “how can you make the money?” You reflect on it and remember that an uncle of yours has been into poultry farming for ten years now and is super-rich. So you say to yourself, “Alas, this is the right business opportunity for me.” Upon further investigation, you realized that if you raise 15,000 layers you can make as much as GH₵ 188,000 in monthly revenue. Ok, we have now established that 15,000 layers will help you hit the jackpot but there is a little problem – you need to raise not less than GH₵ 1.5 million if you have any plans of raising this many egg-laying birds. Finally, you conclude that you can’t raise such an amount of money in such a short timeframe so you change course and decide to rather reach this target in five years. How can you achieve this? Keep reading to find out how.

Well, if you are going to establish a poultry farm of this magnitude, you would want to have business partners. Of course, unless you have bucket-loads of cash, it makes sense to share the financial burden of starting such a capital intensive venture with others.

The first step is to look for two other partners and register the farm as a limited liability company. Once you have found the partners, the three of you can contribute and raise money to start a farm of 1000 layers – this may seem far off from the 15,000-layer target but hey, every successful company had humble beginnings. With 1000 layers you’d probably have to split a startup capital of around GH₵ 140,000 equally among three people meaning each partner would have to contribute approximately GH₵ 47,000.

After each partner has contributed the required amount, all of you now own an equal amount of shares. Now assuming you registered the company with 1 million shares, each shareholder will own 333,333 shares (representing 33.33% of the total shares).

After the registration and share allocation, you move straight to the farm setup.  After you’ve set the farm up, keep rearing the initial 1000 birds until they are 12 months old before you bring in a new set of 1000 day-old chicks – the rationale behind this is to ensure that the farm generates enough revenue to cater for a new set of birds and also to ensure that when the initial set of birds grow past productive egg-laying capacity, the new birds would replace them.

When the initial 1000 birds reach 20 months of age, you sell them off as spent layers for GH₵ 25 each, making a total of GH₵ 25,000. Furthermore, within the first two years, the farm is expected to generate GH₵ 197,360 from egg sales and incur total costs of around GH₵ 339,173. Since the three co-founders would have already invested GH₵ 140,000 the amount of money that will be left at the end of year 2 is expected to be GH₵ 23,187.

Going into the third year, we still have the second set of 1000 layers producing eggs but they would be sold off in the 7th month potentially bringing in an amount of GH₵ 28,000 (Assuming the price of a spent layer increases to GH₵ 28.00). However, since you don’t want your farm to be empty by the seventh month, you would procure 1,500 day old chicks right at the beginning of the third year. By so doing, your farm generates a total of GH₵ 231,740 in egg sales and sale of spent layers and incurs a total cost of GH₵ 286,537. Also, you need to remember that GH₵ 23,187 was projected to be leftover by the end of year 2, hence adding it to the total amount generated by the farm, we get a total of GH₵ 254,927 which implies that the founders would need to raise an extra GH₵ 31,610 to run the farm for the third year.

For year 4, if you maintain a 1,500-bird population, you get to make as much as GH₵ 174,225 for the first eight months from egg sales alone but that was not your goal – your goal was to have 15,000 birds in five years. So what do you do? You go in for external investment. Before going for any investment you’ll need to value your company. Given that your farm is expected to have generated close to GH₵ 500,000 in egg and spent layer sales by this time, you can value your farm at around GH₵ 1.5 million. After valuing your farm, the management of the company will issue 1 million additional shares and distribute them to investors for GH₵ 750,000. At this point, the total shares issued is 2 million with each co-founder’s share in the company diluted from 33.33% to 17% while investors’ shares represent 50%.

Still, on year 4, let’s assume the GH₵ 750,000 investment is made at the beginning of the first month. Straight away, we procure 5,000 day-old chicks. Since the 1500 birds were procured at the beginning of the third year, they will keep laying eggs for 8 months before they are sold as spent layers in year 4. Inferring from how the farm is being run, the farm is expected to generate around GH₵ 720,000 and incur costs of GH₵ 1,130,000. This implies that at the end of year 4, GH₵ 340,000 is expected to be left.

Now, in the 5^th and final year, we bring in 10,000 day-old chicks taking our total number of birds to GH₵ 15,000 (5000 day-old chicks procured in year 4 included). Obviously, if you have a farm of such a capacity you may be thinking of building a hatchery to produce your own chicks but for the sake of this article let us maintain purchasing day-old chicks.  Since 10,000 chicks will be procured, more investment would be needed. At this point, your farm would already have generated over GH₵ 1 million hence you can comfortably give it a valuation of GH₵ 3.3 million.  After the valuation you issue 200,000 more shares and distribute them to investors for GH₵ 300,000 – this means total shares issued now totals 2,200,000 with each co-founder having 15.45% while investors take up the remaining 54.55%. During year 5, the company is projected to generate GH₵ 2,344,560 and incur costs of GH₵ 2,960,000 and since GH₵ 340,000 would be leftover from year 4, coupled with a GH₵ 300,000 investment in year 5, GH₵ 24,560 is expected to be leftover.

Obviously, running a 15,000-layer capacity farm is a very fantastic prospect that could generate as much as GH₵ 261,000 (15% profit margin) in egg sales after 5 years. Hence a profit of GH₵ 52,000 can be generated in a month. Furthermore, assuming the board of directors decide to distribute 60% of the monthly profits (GH₵ 31,200) to shareholders, each of the three co-founders (you included) would receive GH₵ 4,680 while the remaining GH₵ 17,160 of the distributed profits go to the investors. Another thing to note is that salaries are also expenses, therefore, profits are calculated by subtracting total expenses (including salaries) from total revenues within a given period. Hence, since you may be serving as the CEO of this company, it is not far-fetched for you to receive a salary of GH₵ 3,500 per month when the farm reaches a 15,000-layer capacity, thereby taking your total earning per month to approximately GH₵ 8,000.

To conclude, you would have achieved the 15,000 layer target in 5 years but mind you, this might require you to invest around GH₵ 60,000 and find co-founders and investors who will provide an extra GH₵ 1,000,000. Sure, it is not easy to reach 15,000-bird capacity in five years but it isn’t impossible either. This is why I have presented you with a strategic way to achieve just that.