- ✓Cost a house and its equipment from quotes, without forgetting the working capital
- ✓Calculate the return on investment with your own margins per flock
- ✓Choose a source of financing suited to the lifetime of the investment
Costing: the house, the equipment, and the rest
- The house: earthworks and slab, low walls, posts, framework and roof (with overhang), wire mesh, curtains and roll-up system, doors, footbath, drainage channels, electricity. Three quotes, the same plan (level 1: east-west, 10 to 12 m wide).
- The equipment: brooders, feeders, drinkers or nipple lines, water reserve and pump, lamps, scale, cages, high-pressure washer, emergency kit.
- The working capital: the classic omission. The chicks and all the feed of the first flock, the wages, the energy, until the first sale. Without it, the new house stays empty or the flock runs out of feed.
- The contingency margin: 10 to 15% of the total.
Total = house + equipment + working capital + contingencies. It is this figure, not that of the house alone, that must be financed.
The return on investment
With your flock accounts (level 4), you know your net margin per flock for a comparable house, and your number of flocks per year (for example 5 to 6 with white broilers). Annual margin of the new house = margin per flock × flocks per year, taking the margin of your “middle” scenario, not the best one. Return on investment (years) = total cost ÷ annual margin. A house that pays for itself in 3 to 4 years with the middle scenario is a good project; beyond 6 to 7 years, or if only the optimistic scenario pays for it, the project waits.
Also check the market (will the buyer absorb double?), the team (who will run this house?), the water (can the source keep up?) and the cash flow of the flocks running in parallel (level 4).
The sources of financing
| Source | For what | Watch out |
|---|---|---|
| Own funds (reinvested profits) | The safest; the house in several stages (slab, then roof, then equipment) at the pace of the flocks | Slow, but with no interest and no risk |
| Bank (investment loan) | The house and the equipment, over several years | File: business plan, three flock accounts, registers; guarantee required; loan term ≥ payback period |
| Microfinance, cooperative, tontine | Equipment, working capital | Often high rates and short terms: never for a house |
| Suppliers (payment terms) | Feed for the first flock | Negotiated on a track record; costly if badly managed |
| Programmes and support (State, FIRCA, projects, IPRAVI inter-professional body) | Equipment, training, sometimes grants | Paperwork, delays; find out early, do not build the project on them |
| Investor partner | Capital in exchange for a share of the profits | Written contract, clear roles, planned exit |
Golden rule: a long-lived asset is financed long. A ten-year house is not paid for with a six-month loan. And the monthly repayment must fit within the middle scenario, not the best one.
The file that convinces
A bank or a partner does not lend to an idea: they lend to proven figures. Your file: three flock accounts with daily record sheets, registers (level 5, lesson 5), the quotes, the rotation calendar (level 4), the return-on-investment calculation in three scenarios, your team's training certificates (those of the NEXTEKCI School count), and a page on your buyers. An entrepreneur who has kept his record sheets for a year borrows better and more cheaply.
For the entrepreneur
- ›Cost the total (house + equipment + working capital + 10 to 15%), not the house alone.
- ›Decide with the middle scenario: payback in 3 to 4 years, buyer, team, water, cash flow of the flocks in parallel.
- ›A ten-year house is financed over several years, never with a short loan; your record sheets and flock accounts are your best file.
For the technician
- ›Provide the flock accounts and clean registers: they make up the financing file.
- ›Take part in the plan of the new house: orientation, width, water, flows, equipment.
- ›Plan who will run the new house and train the replacement before it opens.
The 3 questions to ask your technician this week
- What is our average net margin per flock over the last three flocks, per house?
- If we open one more house, who runs it, and can the water source keep up?
- Are our record sheets and registers for the last twelve months ready to be shown to a bank?
Key points
- •Total to finance = house + equipment + working capital (chicks + all the feed + wages until the first sale) + 10 to 15% contingencies.
- •Return on investment = total cost ÷ (net margin per flock × flocks per year), with the middle scenario; good if 3 to 4 years.
- •Check market, team, water, cash flow of the flocks in parallel.
- •A long-lived asset is financed long: own funds or an investment loan over several years; never a short loan for a house.
- •The file: three flock accounts, record sheets, registers, quotes, calendar, scenarios, training certificates, buyers.