Monday 21 July 2014

How She Made Her First Million, Weeks after National Service



At the age of 16, when Dayo Abegunde entered the university, she was looking for ‘fresh, different and exciting’. So she never bothered with courses like Medicine, Engineering and Law that freshers were clamouring for. Instead, she applied for Veterinary Medicine because in her words, “The study of lizards and cockroaches could only be fun”. It didn’t take long before the true state of things dawned on her. Her sophomore theory classes were so long and deathly boring, that she wished she could change courses. The practical classes were not any better as the formalin-charged laboratories often led to fainting spells in some of the students. The spells which they called ‘baptism’ was usually the aftermath of logging long hours in class on an empty stomach. By her fourth year, classes began by 7 am and ended at 7 pm, every day. 

Even though the course turned out to be anything but what she expected, Dayo decided that she would still make the best of her situation. She began to search for what was in vet medicine for her. She cast her mind back to the 4 years she had spent in school and began sifting through her experiences for what obtained for her. Luckily, the vet medicine course includes three internships. Her second year internship gave her some on-the-job training on a poultry farm. Her third year internship offered her some laboratory experience and she worked in a vet clinic, for her fourth-year internship. Grades notwithstanding, her training in the University of Ibadan had afforded her no small wealth of practical experience.

She also decided to explore extra-curricular activities by running for the post of financial secretary of her departmental association; which she won. This gave her an opportunity to develop relational, project management and fund-raising skills. The last project which she championed was the revival of the faculty farm and cutting her teeth on this endeavour immensely built her courage in handling daunting tasks. In the fourth year, while seeking the path to follow, a supervisor she worked with in the poultry farm asked her how much she could do with goodwill. She didn’t know that answering that question would radically influence her life thereafter. He rephrased by asking that if someone bestowed her with some favor, how faithful would she be in managing and multiplying it. She replied that her experience and education had brought her to a place where she couldn’t be more ready for such goodwill.

His next question was what she would do if the goodwill was in the form of 200 point-of-lay hens (POL). The first thing she asked him was the cost of one bird. With his answer, she did the math and quickly came up with the working capital figure. This impressed him because after asking so many people the same question none followed up with her kind of response. He then asked her to come up with a business plan of how she would manage a 200 bird poultry-farm. Not knowing where all this was headed, Dayo went and learned how to write a business plan; her draft even included a cash flow and break-even analysis. He made some relevant corrections to her submission and then shocked her with a goodwill of 200 birds; he also included a proviso that his investment be returned after 12 months. The desire to explore the latent economic dimensions of her course, not so much its theoretical aspect, was fully branded in her heart.

But she had to solve the matter of housing and feeding the birds. She got an uncompleted boy’s quarters in her neighbourhood (at Akobo, Ibadan) which needed fixing up before it became habitable. To finish the construction work and build pens she took her savings and borrowed from some friends. Then she approached a feed mill and explained her situation. Using the business plan and her poultry experience, she tried to get a credit facility from the miller with a promise to pay back. The stunned miller replied, “I don’t know you!” To tide the birds over till she found an alternative, Dayo made a down-payment for chicken-feed at the same mill, using her last N5,000. At this point, the tenacity and strong commitment she displayed somehow appealed to the miller. She changed her mind and told Dayo that something in her was willing to roll the dice on the business venture. Her joy knew no bounds.

She didn’t need any farmhands as she could easily manage 200 birds. However, it meant that she had to become a day-student. Imagine the strain of running a poultry in addition to a 7 am to 7 pm schedule at school!

The cost of one bird in 2006, when she began, was N650 and she started with 200 birds. In effect, she had a loan of N130,000 and of course savings and borrowings of roughly N60,000. I will try to summarize the feat she accomplished without leaving out any salient points. (Kindly bear with the figures, it’s included for people who like reading with a calculator in one hand).

ROUND ONE
Months 1 – 3: She had to invest on intensive feeding because her POL required 1 to 2 months of rearing before they began to lay eggs for sale.


Months 4 – 6: The birds had begun laying enough eggs to fully reimburse the miller and friends and to conveniently feed themselves. The fifth month saw her commencing repayments to her supervisor. She was making an income of N35,000 to N40,000 from egg sales and paying a minimum of N20,000 per month to her supervisor. Being a student, still supported by her parents, she was easily saving the balance. There were some initial problems with getting market for the eggs because she was ignorant of that aspect of poultry farming. But when she discovered the various tiers of the market* and how to break in, she began coasting.

Months 7 – 12: She repaid the goodwill before the twelfth month and the impressed supervisor told her she could come back for more birds. She didn’t. After paying back the loan she declared, “I became financially stable”.

Month 18: By this time she was concluding her course and she had about N480,000 in her account from the poultry business. Over N130,000 of that figure came from selling the birds as spent layers (she sold off each one at N750). After disposing the birds, she went for National Youth Service Corps (NYSC) and made some more savings because she had found the job she wanted to do.

ROUND TWO
In 2010 after completing her NYSC, she wasn’t going to play at the level she did as a student. She planned to grow her business and this meant leaving the small boy’s quarters; making the problem of housing to come up once more. She also had to make some trade-off between rearing day-old chicks (DOC) and continuing with the POL. This is because the larger the number of laying birds the more expedient it is to use battery cages. She didn’t have enough money to buy cages so she went for DOC. After scouting for a while, she found a property on lease at N120,000 per annum; she beat the owner down to N80,000.

The cost of one DOC then was about N130 and she stocked 1,500 chicks for N195,000. Because of the increased number of birds she employed a farmhand on a salary of N10,000 per month. The farm also needed to be fixed up, vaccination had to be administered and the birds required feeding but the N200,000 odd balance from her savings was not enough. In fact, feeding alone had cost her N300,000 and she was in debt. Consequently, she had to sell them as POL after thirteen weeks.

The birds did well; over 1,400 of them survived to POL stage. She sold them to a single buyer from Jos at N750 per bird, giving her a total revenue in excess of N1,050,000. She had made a profit of over N350,000 in thirteen weeks from an investment of N700,000. As you’d expect, she had tasted success and had gotten addicted to it; she couldn’t stop.

ROUND THREE
She ploughed her profit back into the business. With cash-in-hand exceeding N1m, she rested the farm for three weeks and conducted thorough disinfection before continuing. Her next stock was 2,500 DOC. To cope with the increased work, she got a second farmhand on contract basis. Being a vet played no small part in ensuring low mortality in her birds and she raised over 2,300 to POL level. Selling at 750 per bird brought a revenue of over N1.7m. She had kept her expenses low labour-wise and didn’t have any cause to renew her lease, so she could afford a small car to aid her mobility to and fro the farm. By this time, she was paying herself a salary of N50,000 per month.


ROUND FOUR
Her stock went up once again; this time to 4,000 DOC. The rented farm couldn’t accommodate that number so she had to move to another farm, located on an acre of land, at Eniosa, Ibadan. Then this once-in-a-lifetime opportunity showed up: The property owner gave her an option of buying the farm at the cost of N3m over two years. Of course, she jumped at the offer. Knowing that she could make N1m every six months, she felt that there was no way she wouldn’t meet up. The customers for her POL were now coming from several northern states* in addition to the ones from the South. Her farm was indeed growing.

As you know, it’s only in fairy tales that everything is rosy and there are no mishaps; in real life it’s quite the opposite. Dayo has had her fair share of knocks; on two occasions she has recorded some outright losses. In one of the instances, the hatchery she had always patronized sold her chicks with a congenital condition. By the time her troubles were over, she had lost over 70% of the stock. It was a very painful experience that affected her bottom line. But she remembered the good days and the things her business had achieved. She looked back on her eight years as a poultry farmer and recalled all the experience she had acquired, the property she owned, the goodwill with customers, the reliable farmhands working with her and several other tangible assets that were hers and concluded, “Dayo, you can do it all over again!”

Now she is playing at the 8,000 day old chick level. She has bought the farm and the adjoining property for another N1m, and interestingly she plans to keep expanding. But, more importantly, she wants others to follow in her footsteps and reap the benefits of poultry farming. In fact, she did what no other interviewee of mine has done. She gave me the inside scoop that many who venture into the business don’t have or could only acquire after so many years in it. She elucidated on everything: gathering capital, recruiting workers, feed quality, egg management – the whole nine yards. They are included in my next post. So watch out for it.

*More details in next post.














 

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