ADEKUNLE AJASIN UNIVERSITY,
AKUNGBA-AKOKO, ONDO STATE.

DEPARTMENT OF BUSINESS ADMINISTRATION

NAME: FAJUYAGBE TEMILOLA JOKE
MATRIC NO: 100803139
LEVEL: 500
COURSE CODE: BUS 504
COURSE TITLE: INTRODUCTION TO ENTREPENEURSHIP

QUESTION:
PICK A PRODUCT OF YOUR CHOICE AND WRITE A FEASIBILITY STUDY ON IT.

LECTURER IN CHARGE:
MR. OLATUNJI O.D.
FEASIBILITY STUDY FOR SETUP OF A SOAP INDUSTRY
INTRODUCTION
The proposal on the establishment of a soap industry is based on the survey made by FAJUYAGBE TEMILOLA JOKE. The business will be a partnership business between two people (FAJUYAGBE TEMILOLA JOKE and NDDC). From the research that was carried out, it was discovered that Soap is one of the most commonly used chemical products in everyday endeavours. It has been produced in different forms: liquid, powder and bar; different colours, different sizes, different textures, different quality; so as to meet with the increasing demand for soap in Nigeria in particular and the world at large. Some soaps are mild and gentle on the skin but tough on germs (medicated soaps), some are tough on stains and harsh to the skin (particularly detergents) while some are gentle on the skin (toilet soap, liquid detergent etc.). Homes, Industries, Offices, Hospitals, Hotels, e.t.c all use soap on a daily basis. Soap is very essential in Medicine and the Pharmaceuticals where purity and cleanliness is very important. This has made the soap industry a lucrative industry with maximum profitability and minimal risk management. With the increasing demand for soap, there is a need for many industries to be open so as to reduce importation of a product that can be produced without much machineries and huge finance. With as little as N20,000.00, a soap business can be established. The venture will help in providence employment, meeting the demand for egg and making the price affordable.
PURPOSE OF THE REPORT
i) To determine the viability of the project or the project or the attractiveness of the project.
(ii) To serve as a plan document indicating the series of choices or strategies for realising the objectives of the project.
(iii) It serves as a guide during the implementation of the project.
(iv) It demonstrates to investors the existence of market for the product/service, the liquidity of the project and potential revenue source for the project.
v) The report serves as a control guide to the investor with regards to product specifications and performance.
THE PRODUCT
The final product of the project is liquid detergent and bar soap (produced either by the cold process or the hot process). The liquid soap is canned in various transparent containers of 1litre and 2litres, while the bar soap is cut into various shapes and sizes to satisfy customer’s needs. These two products are meant for both domestic and industrial uses. The Standard Organisation of Nigeria has maximum parameter limits and these are strictly adhered to.

RAW MATERIALS
The raw materials required for soap making are listed below
1. Palm Kernel Oil (PKO)
2. Soda Ash
3. Caustic Soda
4. Sodium Sulphate
5. Sulphonic Acid
6. Sodium Lauryl Sulphate
7. Texapon
8. Nitrosol
9. Fragrance
10. Colour
11.Preservative

SOURCES OF RAW MATERIALS
The raw materials for this project can easily be purchased in almost every chemical shop. Raw materials of proven standards can be purchased from certified chemical laboratories and petrochemical industries.
PROJECT LOCATION
The project shall be located in Ondo City area of Ondo West Local Government Ondo State. It is sited in this area because it will be the first soap industry in this part of the state. This location is also highly populated as a higher institution is located in this area. Many banks are located in this area also. This location for the business is a very good one since it has access to the student’s campus and the main market in the area. It is also close to the City Hall. This location also makes for easy partnership with hospitals, restaurants, offices and even the University. There is also abundant supply of both skilled and unskilled manpower for the operation of the project. Getting sales personnel is also very easy because of the high level of unemployment in the area.

PROJECT PROMOTER
In association with the partnership agreement, this project is to be funded by the Niger Delta Development Commission.

COST OF PROJECT
This project which is a small scale project will cost about N11,795,000.00 (eleven million, seven hundred and ninety five thousand naira only). FAJUYAGBE TEMILOLA JOKE N795,000.00, while the NDDC contributed N11M to the completion of this project.

MACHINERIES AND PROCESS DESIGN
1. Chips Making Machine: This is used to make chips of soap bars. It is necessary to convert soap bars to chips for proper drying.
2. Mixer Machine: Soap mixer machine is used for mixing all the additives with raw soap and makes a hard paste form.
3. Roller Machine: Soap roller machine is used for rolling soap for better mixing process of all raw materials as well as some more shinning of final soap. After the soap rolling process, output soap will be in thin ribbon form.
4. Vacuum Duplex Plodder Machine: The plodder is used for the compression of soap. The final output will be in bar form.
5. Circular Bar Cutting Machine: This is used for cutting of soap bars automatically.
6. Stamping Machine: Soap stamping process gives the exact shape and size of final soap. The final stamped soap will be fine finished with the required shape, size and brand name as per customers need. Finally, soap will be ready for packing.
7. Measurement Instruments: These include pH meter, photometers of various types. Measuring cylinders to measure the quantities required are also needed.
8. Thermometer.
9. Canning Machine

QUALITY CONTROL
This product may likely be exported, so, efforts shall be made to meet the internationally accepted standards with regards to scent, effect on skin, impurities, and thickness. To achieve this, testing kits shall be purchased and a mini-quality control laboratory shall be established. This entails employing a quality control officer that will be in charge of the mini laboratory. Also, independent quality control laboratories certified by the right body, shall be used to analyse products to obtain an objective quality certificate of analysis. Raw materials, the manufacturing process and the finished product shall undergo series of test to ensure the safety of the customers. The most important test is the test to ensure the product is not carcinogenic and eco-friendly raw materials are used in the manufacturing and packaging process.

MARKETING OF PRODUCT
1. The products (liquid detergent & bar soap) shall be sold directly to buyers at the project site.
2. Sales outlets shall be opened in Ondo City, Akure, Odigbo, Ore, Osun, Osogbo, Akoko, Irele, Okitipupa, and Edo State to enhance easier contact with the customers.
3. The distributor system shall also be employed
4. Continuous effort shall be made to secure international market for the product
5. The sales force shall be headed by an experienced marketing manager assisted by a team of enthusiastic salesmen. ADVERTISING AND PROMOTION
The products shall be continuously advertised in both local and national newspapers, and other printed media. Electronic media such as radio and television both at the local and the national levels shall be extensively used to publicize the product. The company shall also engage in shows promotions to advertise the product.

PRICING SYSTEM
Because of the price influence of raw materials, market demand and the volume of importation, the factory prices for the products are listed below.
N80.00 for half litres of liquid soap
N200.00 for 1 litre of liquid soap
N250.00 for 2 litres of liquid soap
N75.00 for big bar soap
N35.00 for small bar soap.
The price of raw materials at the time of this report was investigated was N600,000.00 but the project is based on N0.5m, to account for any upward rise in price.

PRODUCTION TURNOVER
The project shall run in a single shift (8.00am-6.00pm) system with a minimum production of 1,500 litres daily for liquid soap. By working for 24days in a month including Saturdays, a minimum of 36,000 litres of liquid soap shall be produced in a month. For the bar soap, a minimum of 1000 bars of 0.12kg and 0.10kg will be produced daily and by working for 24days, 24,000 pieces will be produced. As demand of the product increases, the company shall improve on its turnover and two or three shift system shall be employed.

PRODUCTION CALCULATION
75% of the raw materials is realized as the finished product. The percentage recovery may be more depending on the efficiency of the machines. If the cost of raw materials to produce
1litre of liquid soap is N140.00,
Therefore 1,500 litres will cost = N120 × 1500 = N180,000
Therefore, one month = N180,000 × 24 = N4,320,000
If one litre is sold at N200.00, 1,500 litres will cost:
1,500 × N200.00 = N300,000.00
For one month, the cost will be = N300,000.00 × 24 = N7,200,000.00
The gross profit for the daily production =N300,000.00–N180,000.00 =N120,000.00
Therefore, for 24 working days a month including Saturday,
Gross profit: = 24 × N120,000.00 = N2,880,000.00
If the raw materials for producing 1 bar of soap is N20.00,
Therefore, 1,000 bars of soap = 20 × 1000 =N20,000.00
For one month, = N20,000 × 24= N480,000.00
If one bar is sold for N40, 1000 bars = 1000 × N40.00= N40,000.00
For one month, the cost will be = 24 × N40,000.00 = N960,000.00
The gross profit for daily production is = N40,000.00 – N20,000.00 = N20,000.00 Therefore, for 24 working days in a month, including Saturdays,
Gross Profit = N20,000.00 × 24 = N480,000.00

MANAGEMENT STRUCTURE
This project shall be managed by FAJUYAGBE TEMILOLA JOKE and the Niger Delta Development Commission (NDDC). Specialized management personnel would be provided by FAJUYAGBE TEMILOLA JOKE and NDDC while the bulk of labour will be provided by the community. In order to avoid conflict in areas of employment, management of funds and operations, a memorandum of understanding shall be entered into by Abraka Community and the project financer- FAJUYAGBE TEMILOLA JOKE and NDDC.
LIMITING FACTORS
Here, it is important to highlight some of the practically experienced and envisaged factors that may occasionally have a relative impact on the project. Some of these factors are listed below.
1. Competition from other soap industries already in existence. However, the project shall handle this situation by producing at the lowest possible price and constantly being abreast with marketing information so as to respond to market fluctuations through appropriate adjustment of prices. This problem of competition shall also be resolved by constantly rebranding the product, constantly improving on the quality and through adequate advertisement.
2. Variations in the raw materials supplied. This could be due to ban on importation of the raw materials as a result of failing quality tests or as a result of transportation problems making the raw materials not to get to the manufacturers on time. This project shall solve this problem of variations in the availability of raw materials by bulk buying and proper storage of the raw materials
3. Price variation of the finished product. There is always price variation for finished goods which may be as a result of government policies or a new company entering into production. One cannot sell a product below its production cost. Therefore, this project shall anticipate and forecast any price variation and then make adjustments before the forecast materialize.
4. Power problem. Because of the large output, machines are required for production and these machines are electrically operated. Electricity supply in this area is poor so this project shall acquire generator in case of power failure.
5. Taxation: As the income is increasing, government taxation increases. This company will ensure it hires good tax consultants to deal with the issues of heavy taxation.
6. Natural calamities. In this part of the nation, the predominant natural calamity is flooding. To ensure that this does not occur, this project has been set on a highland and should in case it happens, the company is to be insured by a good insurance company.
RISK ANALYSIS
From the limiting factors analysed, it is clear without reasonable doubt that the risk factors are at a minimal level. Thus, this project has about 95% chances of success if embarked upon.
JUSTIFICATION OF THIS PROJECT 1. The raw materials are abundantly available locally. 2. All the machineries are available at a snap of the finger. The spare parts are also readily available. 3. There is a large and expansive market nationwide for sale and distribution of the product. 4. It provides a much needed raw materials for other industries. 5. It will provide employment opportunities for a teeming population of unemployed youth in the area thereby reducing the level of poverty and crime rate. 6. It will help in skill acquisition for people in the area. 7. It will increase the National Gross Domestic Product (GDP). 8. It will reduce foreign exchange expenditure on the importation of soap. 9. For the fact that this project is rural based, it will reduce rural-urban migration/drift thus reducing over population in the urban areas. 10. The production of soap is a simple process. It does not require highly trained and expensive personnel to operate. 11. This project will bring development to the area because this project will open doors to other industries. CONCLUSION
From the above analysis and subsequent computation, it is very clear without reasonable doubt that soap production for both domestic and industrial uses is a very possible and viable project. Ondo City in Ondo West Local Government Area of Ondo State is a perfect location for this project because of access to various parts of the state and nearness to Lagos City. This project being partly funded by NDDC, has electricity supply from the Adeyemi University of Education. This project in Ondo City is also very close to Akure, where raw materials are easily purchased. The community is willing to contribute her quota in terms of a favourable working environment for the project. This feasibility report is based on practical experience of the management firm that wrote it. This firm has been practically involved in similar projects from the stage of acquiring raw materials up to the stage of marketing and distribution. These products are already being sold all over the country especially in Ondo City and Akure. The facts and figures presented in this report are therefore very practical and authentic. This project is bound to succeed greatly if established.

REFERENCES