7/30/2014

Mushroom Farming ENTREPRENEURSHIP BBA 303

3rd year

1st Semester

1st Assignment

Name-: K.T Liyanage

Reg. No.-: A/10/BBA/148

Lec. Name-: Ms R.M.C Kumari

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Contents 1 Introduction ............................................................................................................. 3

2 About the Business.................................................................................................. 4

3 Details of the Business: ........................................................................................... 5

3.1 The Details about the Business .......................................................................... 5

3.2 Details about the product charactericts .............................................................. 6

3.2.1 Products: ................................................................................................... 6

3.2.2 Process of Production: .............................................................................. 7

3.2.3 Location: ................................................................................................... 8

3.2.4 Workers: .................................................................................................... 8

3.2.5 Photos of the Work Place .......................................................................... 9

4 Business Plan for a Startup Business .................................................................... 10

4.1 The usefulness of business plan ....................................................................... 10

4.2 The Benefits of using Business plan ................................................................ 10

5 Marketing Strategy ................................................................................................ 12

5.1 Marketing mix .................................................................................................. 12

5.1.1 Product .................................................................................................... 12

5.1.2 Price ........................................................................................................ 13

5.1.3 Place ........................................................................................................ 13

5.1.4 Promotion ................................................................................................ 14

6 Human Recourse Strategy ..................................................................................... 14

7 Financial Strategy ................................................................................................. 15

7.1 Initial capital investmemt ................................................................................. 15

7.2 Projected income statement .............................................................................. 16

7.3 Balance sheet for the year 2013 ....................................................................... 17

7.4 Break Even point .............................................................................................. 18

7.5 Payback period ................................................................................................. 18

8 Innovation Strategies ............................................................................................ 18

8.1 Entrepreneurial Characteristics ........................................................................ 18

8.1.1 Commitment, Determination and Perseverance: .................................... 19

8.1.2 Creativity and Innovations: ..................................................................... 19

8.1.3 Resourcefulness: ..................................................................................... 19

8.1.4 Risk Taking: ............................................................................................ 19

8.1.5 Tolerance for Failures: ............................................................................ 19

8.1.6 Visionary: ................................................................................................ 20

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8.1.7 Optimism: ............................................................................................... 20

8.1.8 Integrity and Reliability: ......................................................................... 20

8.1.9 Knowledge about the Market and All- around knowledge: ................... 20

8.1.10 Flexible and able to Adopt: ..................................................................... 20

8.1.11 Energetic and Hard Working: ................................................................. 20

9 Sales Forecast ........................................................................................................ 21

9.1 Sales Forecast ................................................................................................... 23

10 The important of Creativity and Innovation ideas to the Success the Business ... 24

11 Environmental Factors to Success the Innovation ................................................ 25

12 Conclusion ............................................................................................................ 26

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1 Introduction

Entrepreneur is one who undertakes to organize, manage, and assume the risk of a

business. Today, an entrepreneur is an innovator or developer who recognizes and seizes

opportunities and converts those opportunities into marketable ideas.

This assignment is based on a Research on an entrepreneur. I interviewed the

entrepreneur and collected details about his business, creativity and innovation…etc.

Then that information are summarized and presented through this assignment. I selected

the entrepreneur who is doing a concrete industry.

Firstly I collected details about the nature of the business then I collect the details

about his business plan after that I made some questions before meeting the

entrepreneur. I could understand his entrepreneurial characteristics when I talk with

him. And I could see his products and collect details about those. Then I considered how

the creativity and innovation are important to his success and how does he encourage

an environment of creativity in his business.

Also I consider about his Marketing Strategy, Human Resource Strategy, Financial

Strategy and Innovation Strategy. Also I get the progress of business in last 3 year.

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2 About the Business

About the Entrepreneur:

Name of the Entrepreneur : K.T.M Karunarathne

Address : No. 225, Muruthalawa Raod, Puwakgahakumbura,

Peradeniya.

Telephone : 071 4683367 / 077 8102515

Age : 41 Years

Gender : Male

Civil Status : Married

Educational Qualifications : Passed (G.C.E) O/L

Awards : Winner of the Star Awards for the Best

Entrepreneur of Central Province in 2012

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3 Details of the Business:

The business is mainly focusing mushroom cultivation of the Smallholder

Plantation. Entrepreneurship Programme illustrates how best public and private

stakeholders can get together to launch small but commercially viable. The project

provided a group of women interested in engaging in mushroom cultivation with

technical, financial and management assistance backed up with a strong market linkage.

The „mushroom project‟ started in 2009 with 2 beneficiaries. This expanded to three

other sites involving 5 beneficiaries in 2010. All beneficiaries were provided with

technical training such as mushroom hut construction, preparation of growing bags,

filling of bags, sterilization, and preparation of spawns.

The resource persons were drawn from provincial agricultural agencies.

Furthermore, two successful female entrepreneurs who pioneered the project in 2009,

joined the training team to train newcomers in 2010 and 2011.

Apart from technical training, the Smallholder Plantation Entrepreneurship

Programme has established marketing linkages with reputable private companies to sell

the produce.

3.1 The Details about the Business

Name of the Business : Nimasha Mushroom Dealers.

Address : Nimasha Mushroom Dealers Horagasmulla, Divulapitiya,

Srilanka

Telephone : 0714683367 / 0778102515

Commencement : 11th of June 2014

Reg. No. : IDACP / 00120

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3.2 Details about the product charactericts

3.2.1 Products:

He is a supplier and manufacturer of following products.

Mushroom 50g packets

Mushroom 100g packets

Mushroom Jam products

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3.2.2 Process of Production:

There are six steps to growing Mushroom.

1) Making Mushroom Compost

This phase of compost preparation usually occurs outdoors although an enclosed

building or a structure with a roof over it may be used.

2) Finishing the Compost

There are two major purposes to Phase II composting. Pasteurization is necessary to

kill any insects, nematodes, pest fungi, or other pests that may be present in the compost.

And second, it is necessary to remove the ammonia which formed during Phase I

composting. Ammonia at the end of Phase II in a concentration higher than 0.07 percent

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is often lethal to mushroom spawn growth, thus it must be removed; generally, a person

can smell ammonia when the concentration is above 0.10 percent.

3) Spawning

Mushroom compost must be inoculated with mushroom spawn (Latin expandere =

to spread out) if one expects mushrooms to grow.

4) Casing

Casing is a top-dressing applied to the spawn-run compost on which the mushrooms

eventually form.

5) Pinning

Mushroom initials develop after rhizomorphs have formed in the casing. The initials

are extremely small but can be seen as outgrowths on a rhizomorph.

6) Cropping

The terms flush, break, or bloom are names given to the repeating 3- to 5-day harvest

periods during the cropping cycle; these are followed by a few days when no mushrooms

are available to harvest.

3.2.3 Location:

The home and the land of the work place are nearly located and close to the,

Divulapitiya Road. There is a small hut in the work place. Stocks of products are stacked

on the land floor and a side of the road.

3.2.4 Workers:

He has one permanent worker and several temporary workers. The proprietor also works

in the site.

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3.2.5 Photos of the Work Place

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4 Business Plan for a Startup Business

4.1 The usefulness of business plan

The business plan consists of a narrative and several financial worksheets. The

narrative template is the body of the business plan. This business is using Business Plan.

It contains more than 150 questions divided into several sections.

The real value of creating a business plan is not in having the finished product in

hand; rather, the value lies in the process of researching and thinking about the business

in a systematic way. The act of planning helps Entrepreneur to think things through

thoroughly, study and research if he is not sure of the facts, and look at his ideas

critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later.

This business plan is a generic model suitable for all types of businesses. However,

this Entrepreneur is using and modify it to suit to his particular circumstances. It also

has tips for fine‐tuning his plan to make an effective presentation to investors or bankers.

4.2 The Benefits of using Business plan

There are 10 benefits of using business plan for the Nimasha Mushroom Dealers.

They are;

1. The company will stay on strategy.

It's hard to stick to strategy through the daily routine and interruptions. Use a

business plan to summarize the main points of his strategy and as a reminder of what it

both includes and rules out.

2. Business objectives will be clear.

Use your plan to define and manage specific measurable objectives like web visitors,

sales, margins or new product launches. Define success in objective terms.

3. The Entrepreneur’s educated guesses will be better.

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Use the Business Plan to refine his educated guesses about things like potential

market, sales, and costs of sales, sales drivers, lead processing and business processes.

4. Priorities will make more sense.

Aside from the strategy, there are also priorities for other factors of Mushroom

business like growth, management and financial health. Use his plan to set a foundation

for these, then to revise as the business evolves.

5. The Entrepreneur understand interdependencies.

Use a plan to keep track of what needs to happen and in what order. For example, if

you have to time a product release to match a testing schedule or marketing to match a

release, this business plan can be invaluable in keeping the entrepreneur organized and

on track.

6. Milestones will keep Entrepreneur on track.

Use a business plan to keep track of dates and deadlines in one place. This is valuable

even for the one-person business and vital for teams.

7. You'll be better at delegating.

The business plan is an ideal place to clarify who is responsible for what. Every

important task should have one person in charge.

8. Managing team members and tracking results will be easy.

So many people acknowledge the need for regular team member reviews and just as

many admit they hate the reviews. The plan is a great format for getting things in writing

and following up on the difference between expectations and results with course

corrections.

9. The Entrepreneur can better plan and manage cash flow.

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No business can afford to mismanage cash. And simple profits are rarely the same

as cash. A cash flow plan is a great way to tie together educated guesses on sales, costs,

expenses, assets you need to buy and debts you have to pay.

10. Course corrections will keep your business from flopping.

Having a business plan gives the entrepreneur a way to be proactive or not reactive

about business. Don't wait for things to happen. Plan them. Follow up by tracking the

results and making course corrections. It's a myth that a business plan is supposed to

predict the future.

5 Marketing Strategy

5.1 Marketing mix

In this phase, we have developed marketing mix in which all the 4 Ps were

consistent. These 4 Ps easily adopt any market changes. These Ps are

1. Product.

2. Price.

3. Place.

4. Promotion

5.1.1 Product

This Entrepreneur are going to sell his product which is mushrooms. After

cutting, the mushrooms are ready for before delivery, it is segregated them into three

categories.

“A” Category: The mushrooms included in this category are properly weighted and

their color is also good. Mostly the oyster mushrooms with light brown colour are

included in this category and the size of the flower is 5-7 inches.

“B” Category: The mushrooms included in this category are smaller in size than the A

category mushrooms. But some full size mushrooms were also included in this category

due to their color. The color of such mushrooms didn’t match the A category

requirement and thus they are included in this category.

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“C” Category: The mushrooms included in this category are spoiled or these include

the mushrooms that attain their maturity level. These mushrooms are broken sometimes

from centre and hence are included in this category

5.1.2 Price

They are try to capture higher market share so they set their prices at a level that

are affordable by their customers. As the price of canned mushroom is very high, so to

capture market, they reduce their price. Canned mushrooms are available in market at

price of 800-1200 per kilogram depending upon the quality. So they set our prices

according to our product categories.

CATEGORY PRICE PER

KILOGRAM

“A” Category 500

“B” Category 350

“C” Category 250

5.1.3 Place

Mushroom will be marketed locally through a free market system. As we know

that the main market of mushroom is pizza parlors, restaurants and shopping malls. But

initially this Entrepreneur is mainly targeting just the shopping malls target market,

pizza parlors and the restaurant. This is because the trend of fresh pan pizza is raising a

lot. And customers they are targeting are used of dining outside a lot. And in the next

six months, they assumed to also provide fresh mushrooms in big shopping malls like

Cargills, Kells Super and Arpico super center.

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5.1.4 Promotion

As their knowing that their customer is well aware of the taste of the mushrooms.

To introduce the nutritional aspect of mushroom, they use brochures for their promotion.

Moreover, they should also take part in food festivals to promote our product.

6 Human Recourse Strategy

When it comes to optimal HCM, HR leaders need to understand how technology

can minimize or eliminate the costs with paper processes and the associated

inefficiencies. HR executive for the Nimasha Mushroom Dealers. “There are significant

dollars tied to reporting errors, redundancies, and the inability to retrieve vital workforce

information with on-the-spot access.

When it is evaluated their return on investment, including both hard- and soft-cost

savings, they had a real moment. They couldn’t afford not to take advantage of

functionality. In addition to controlling and cutting costs, they have revitalized HR and

impacted their overall business.

Hiring managers have become more accountable, and employees are taking more

control of their financial lives because they now can conveniently access their ongoing

income and retirement plan details.

Because employee metrics are stored in one single, easy-to-manage platform that is

available to the entire HR team, managers, and employees, the National Mushroom’s

information accuracy has improved significantly. With reliable, centralized, and secure

information, as well as instant, configurable reporting, the HR team is well-positioned

to reduce risk and vulnerability to legal issues and noncompliance.

To get a seat within the executive circle, Osunsade recommends HR practitioners

leverage technology to automate processes, convert workforce metrics into business

results, and establish credibility as corporate strategists. She also believes in the power

of relationships with her HCM provider.

To prosper in today’s business environment, HR executives must focus on finding

and trusting the right HCM business partner,” said Osunsade. “More than a technology

company, Ultimate has been establishing long-standing, collaborative relationships with

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its customers for more than two decades. I can attest that Ultimate is the real deal. Now

with UltiPro supporting us, we are being proactive and improving the quality of what

we provide to our business and to our workforce.”

7 Financial Strategy

7.1 Initial capital investmemt

Products Cost

Purchase of raw material 300000

Building rent 25000

Iron Shelves 30000

Supplies (office and operation) 10000

Cutting equipment 5000

Utilities 30000

Generator 120000

Humidity controller 10000

TOTAL 530000

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7.2 Projected income statement

Particulars 2011 2012 2013

Sales 1440000 1800000 2400000

less: Cost of goods sold

Cotton Waste 44800 61600 80500

Spawn 24000 30000 37500

Plastic Bags 9600 12000 17500

Labor 224000 300000 375000

Total CGS 302400 403600 510500

Gross profit 1137600 1396400 1889500

Less: Operating expenses:

Administrative exp

Salaries

Electricity

Traveling

240000

120000

48000

264000

132000

50000

290400

144000

52000

Marketing exp

Advertisement

Telephone

120000

24000

100000

25000

100000

27000

Total Operating Expenses 552000 571000 613400

Earnings before income tax 585600 825400 1276100

Tax deduction: (5% on sales) 72000 90000 120000

Net income 513600 735400 1156100

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7.3 Balance sheet for the year 2013

Particulars Debit (Rs.) Credit (Rs.)

Current Assets:

Cash 1000000

Inventory (F/G, Material) 56800

Total Current Assets 1056800

Fixed Assets:

Land & Building (25000/month rent) 300,000

Machinery (30,000) 27000

Less: accumulated depreciation (30,000 @

10%=3000)

Total Fixed Assets 327000

TOTAL ASSETS 1383800

Current Liabilities:

Estimated income tax 72000

Total current Liabilities 72000

Stockholders’ Equity:

Common stock 776600

Retained earnings 535200

Total stockholders’ equity 1311800

TOTAL LIABILITIES & STOCKHOLDERS

EQUITY

1383800

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7.4 Break Even point =Total Fixed Cost/ (selling price per unit-variable cost per unit)

= 832800/ (500-5)

= 832800/495

= 1682 units

7.5 Payback period

=Investment/Retained earnings

=1000000/535200

=1.87 years

=1 year, 10 months and 13 day

8 Innovation Strategies

8.1 Entrepreneurial Characteristics

Mr. Karunarathne had started his business on 11th July 2002. Today, it is a

successful and strong business. He had worked in a hardware shop and a private

company after his A/L before starting this business. Although, he says “he didn’t like to

work under an employer and he dreamed his own business from his school age.

When he started the business he had 245 rupees on his hand. He had to borrow

some money from a relative and also applied for the bank loans. He had made concrete

bricks very firstly. Then he had started to make other items with the growth of his

business.

There are many characteristics of a successful entrepreneur. When I interview Mr.

Karunarathne, I Could found special characteristics through his story of business life. I

can list those characteristics as follow.

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8.1.1 Commitment, Determination and Perseverance:

Mr. Karunarathne also had to face so many problems when he was starting his

business. First of all he had to find money. Then he had to find necessary knowledge

about the industry. He says some people do not tell the tips and secrets. Therefore he

has to find these things through his experience. He had not machine for making concrete

bricks. Though, he had to do it in energy of his hands. There had a legal issue of his

land. So he had stacked his products in a side of the road, but his determination was not

going down. Now he has big space for his work. Today he is a successful businessman.

8.1.2 Creativity and Innovations:

When creating a business idea, many entrepreneurs have to be very creative. I

could understand the creativity of this person when I see his work. He started his

business with making concrete bricks, but the varicose creative items now there. (Colour

paving blocks, Concrete Fence Posts and other ornaments). He stacks his products in a

creative way. He is very innovative person. He seeks new designs for his molds and

tries to make a unique product. Therefore the creativity and innovation is a secret of his

success.

8.1.3 Resourcefulness:

He stocks his products to satisfy the customer needs. He has enough resources for

meet evenly unexpected orders. Though he has one permanent worker, if he has to

complete huge order he can find workers any time.

8.1.4 Risk Taking:

When he started business he has to borrow money from different parties. He has

to pay that credits through the income of his business. It was difficult, but he took that

risk and success his business.

8.1.5 Tolerance for Failures:

Entrepreneurs use failing as a learning experience. Mr. Karunarathne says “bricks

and pots were broken at the beginning, but he didn’t give up his goal”. He found new

methods and tips for that through his experience.

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8.1.6 Visionary:

Entrepreneurs know where they want to go. They have a vision or concept of

what their firm can be. Actually this entrepreneur has a vision where they are go to

what are the developments needed. He plans costs incurred every day and put a note

about that. That is the way he forecasts plans for months and year. Every day he keeps

records neatly beginning of the day end of the day without any knowledge related to the

accounting.

8.1.7 Optimism:

He always thinks positively. He believes that “If I work hard I can get success.

He tells me his business has never failed. It is not practical but his thinking is great as

an entrepreneur.

8.1.8 Integrity and Reliability:

Integrity and reliability are the glue and fiber that bind successful personal and

business relationships and make them endure. He always tries to produce a quality

product to his customers. And also he maintains good relationship with the neighbors

and villagers. He had contributed to the society of welfare (dansal, to the temples).

8.1.9 Knowledge about the Market and All- around knowledge:

He could explain his competitors of his industry. He knows this industry is

developed day by day. So we can get opportunities more and more.

8.1.10 Flexible and able to Adopt:

Another concrete work place is launched near to his work place for making

concrete bricks. So he stopped making concrete bricks because of the competitor as well

as it was gained low profit. So he easily adopts this situation while not harming to his

vision.

8.1.11 Energetic and Hard Working:

He also works his work place with encourage. He tries his best to achieve his

target. No matter it is day or night. He gives his full energy to his business. When I go

there he was working with his worker.

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9 Sales Forecast

This company will remain with a single client throughout this first year before

expanding in the future. We need to establish history with one client, and we also need

to maintain the constraints on this business as a single hobbyist business.

During the following year, when they have a driver’s license, they can expand to three

clients.

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9.1 Sales Forecast Year 1 Year 2 Year 3

Sales Initial

client 2,40000 7,20000 9,00000

Other 0 0 0

Total Sales 2,40000 7,20000 9,00000

Direct Cost of Sales Year 1 Year 2 Year 3

Unbilled minor accessories, 48 144 180

Testing supplies, etc

Other 0 0 0

Subtotal Direct Cost of Sales 48 144 180

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10 The important of Creativity and Innovation ideas to the Success the

Business

Most of the entrepreneurs start his business while getting risks on the profits or

income. They borrow money from banks or other parties. Therefore they have to pay

off loans even they earn losses instead of profits. This entrepreneur also faced for these

situations. They earn more and more with innovations and creativity. There are no

innovations or creativity in the business that business will fail. If one be success in his

business or earn more profits the reason will be creative and innovations.

Mr. Karunarathne also started his business making concrete bricks. He says “his

profit from one concrete brick is one rupee”. Unless he innovative he cannot be success

today in this way. He started to make new concrete items and earn profits more and

more. Then those profits are reinvested in the business. The return on the investment of

his business is 23%. He could have found new space for his business, and also he

recruited experienced worker. He attracts customers and endures with long period.

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11 Environmental Factors to Success the Innovation

Some public sector authorities or ministries are appreciated and awarded the

creativity and the innovation of the entrepreneurs. This also is a facet of success. This

entrepreneur also won star award for the best entrepreneur of Central Province from

2005-2009. So we can get an idea about how creativity and innovation help for the

success of a business.

Small or medium scale businesses are conducted with fewer workers. Therefore

proprietor/ entrepreneur have to work in the business. So I think encourage himself for

making creative ideas. In this business has one worker. He trusts him and sometimes

gives responsibility of the work place. He says, “I give forgiveness for the mistakes to

the workers because I also make mistakes”. He takes advices and ideas from his

experienced worker. He says “my worker has experienced and knowledgeable than me”.

And he gets ideas from the supplier of fiber molds about the designs. I can see an

innovative climate is built within the work place. Although the entrepreneur also work

in the place, but he don’t supervised or strictly advised for his workers.

Most of the entrepreneurs create innovative climate himself. This entrepreneur

hopes to start hardware shop and showroom in the Peradeniya Town. Always he tries to

achieve his targets. So, he thinks creative always creative ideas.

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12 Conclusion

The business of entrepreneur is the Mushroom industry. He makes, Mushroom

related products. There are many characteristics of the entrepreneurs. I found many

characteristics while I am talking with the entrepreneurs, like determination, creativity

and innovation, risk taking…etc. Most of the entrepreneurs come up with new ideas

according to their personal interests. Entrepreneurs can earn profits through the

creativity and innovations. And also the entrepreneur encourage creative environment

in the work place.

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