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Block Industry Business Plan

INTRODUCTION

The increasing need to build new residential houses, factories and offices to accommodate Nigeria’s large population has made cement block production a very lucrative business in the country. 

Over the last 10 years, the building and construction sector has undergone strong growth rates in the range of 8-10% in Nigeria (Source: National Bureau of Statistics, 2013).

Housing and construction are one of the major drivers of growth in more than 40 allied industries, the cement block industry included. Demand for cement blocks has also risen tremendously as a result of the demand for it in the housing and construction industry. In addition to this, there is also an increasing demand for cement blocks from government and multi-national contractors for building purposes.

A potential cement block producer must have a good level of patience and must have time for the job. He must also know or be willing to know about building a business, as this will help a great deal and increase his profitability in the long run. Also, the business owner must have a good networking relationship with individuals and corporate customers; he must possess the necessary skills to:

Manufacture concrete blocks with highest quality cement that dries quickly for commercial production,
Recruit skilled workforce,
Set up the business on dry land,
Ensure availability of truck to deliver goods to customers’ desired location,
Provide reliable and durable equipment for the successful operation of the business

Ironically, the market is still relatively small. There is strong competition,  and the cost of preparing the cement block is high. The industry is also affected by the non-availability of modern machinery in the local market at an affordable rate. Local customs traditions and non-availability of infrastructural facilities are also other major hurdles in the development of the sector.

The main risks associated with the business include the inability of production staff to wet the blocks on the second day of production thereby preventing the blocks to command high market value, frequent rainfall to prevent blocks to congeal as at when due and inability to service vibrating machine regularly.

The volatility of the price of cement is a huge threat in the blocking making industry. However, the business owner should ensure close supervision of production staff and regular servicing of vibrating block molding machine.

As a start-up business, the categories of cement blocks for production are four inches block, six inches block and nine inches block.

The business is expected to be registered with all the relevant agencies such as the Corporate Affairs Commission and Concrete Blocks Manufacturer Association of Nigeria. The business is starting up with =N=5,000,000 (five million naira) in cash part of which would be used to finance fixed assets, expenses and other running cost.

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Table of content

Page

Executive Summary3
Business Description4
Products and Services6
Market Analysis7
Competitor Analysis8
Sales and Marketing Plan9
Operational Plan12
Management Plan13
Financial Plan and Projections14

Executive Summary

PATILAD BLOCKS is a business involved in the manufacturing of building concrete, bricks and blocks for masonry, builders association, housing consultant, development agencies, construction workers etc. We make a block of uniform quality and sell them at a price high enough to cover costs and make a reasonable profit.

Cement concrete blocks are modern construction materials and as such are use in all the construction viz: residential, commercial, and industrial building construction. The business is owned by Dayo Adetiloye with over 15 years experience in Block making and construction works industry. The project set up cost is N5 million using imported machines.

The project is very profitable. With aggressive marketing strategies, good management, and the payback period would be less than 2 years. The return on investment is very encouraging at 25 per cent of profit.

We forecasted a 40% market share. The business will generate a very high gross margin and a modest net margin after year one and comfortable margin after year three. By year three the business will have developed a respectable yearly net profit.

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