Biscuit Production Business

1. A Brief Description of the Project

This feasibility study explores the establishment of a small-scale biscuit production business
in Nigeria. The business will focus on producing affordable, high-quality, and nutritious
biscuits to cater to a wide range of consumers, including children, students, office workers,
and households.
The production process will involve modern baking techniques and the use of locally
sourced ingredients to create delicious and hygienic biscuits. The business will operate from
a small bakery facility, equipped with the necessary machinery to ensure efficiency and
consistency in production.
Product Offerings
The business will produce different varieties of biscuits, including:
Butter Biscuits – A classic, soft, and crunchy biscuit.
Chocolate Biscuits – Rich in cocoa for chocolate lovers.
Coconut Biscuits – Infused with coconut flavor for a tropical taste.
Sugar-Free Biscuits – Targeting health-conscious consumers.
Business Model
Production will take place in a rented bakery space equipped with necessary machinery.
Distribution will be done through retailers, supermarkets, schools, and online platforms.
Marketing strategies will include social media promotion, branding, and local store
partnerships.
The startup capital for this project is ₦2 million, covering equipment, raw materials,
operational costs, and branding. With effective marketing and quality control, the business
is expected to break even within 3 months and generate significant profits in the long run.

2. The Project Objectives

The primary objective of this biscuit production business is to establish a profitable and
sustainable venture that provides high-quality, affordable, and nutritious biscuits to a wide
range of consumers. The business aims to achieve the following:
1. High-Quality Production
To produce and distribute fresh, tasty, and hygienic biscuits that meet industry standards.
To use locally sourced, high-quality ingredients to ensure great taste and nutritional value.
2. Profitability and Growth
To generate consistent profits by achieving high sales volume.
To break even within the first 3 months and become self-sustaining.
To expand production capacity and introduce new biscuit flavors within the first year.
3. Affordable and Accessible Products
To offer biscuits at competitive prices to attract customers from all income levels.
To distribute through supermarkets, schools, local retailers, and online stores for maximum
reach.
4. Job Creation and Economic Impact
To create employment opportunities for bakers, sales personnel, and distributors.
To support local farmers and suppliers by sourcing ingredients like flour, sugar, and milk
locally.
5. Healthier Biscuit Alternatives
To introduce low-sugar and fiber-rich biscuits for health-conscious consumers.
To explore the production of organic and gluten-free biscuits in the future.
6. Brand Development and Market Expansion
To establish a strong brand identity through creative packaging and marketing.
To expand distribution to regional supermarkets and online platforms within one year.
By focusing on quality, affordability, and strategic marketing, the business aims to become a
recognized and trusted biscuit brand within its first year of operation.

3. Economic and Social Justification for the Project

The biscuit production business is economically and socially justified due to its potential to
meet market demand, generate employment, support local industries, and provide
affordable nutrition. Below are the key economic and social benefits of this business:
Economic Justification
1. High Market Demand
Biscuits are a popular and affordable snack in Nigeria, consumed by people of all ages.
The increasing demand for locally produced, high-quality snacks presents a great business
opportunity.
2. Profitability and Business Growth
With low production costs and high demand, biscuit production is a profitable venture.
The business has expansion potential, with opportunities to introduce new flavors and
healthier options.
3. Contribution to the Local Economy
The business will support local farmers and suppliers by sourcing ingredients like flour,
sugar, butter, and milk locally.
It will contribute to Nigeria’s manufacturing sector, reducing dependence on imported
biscuits.
4. Employment Generation
The business will create jobs for bakers, sales representatives, logistics personnel, and
factory workers.
It will also provide indirect employment for farmers, packaging suppliers, and distributors.
Social Justification
1. Affordable Nutrition
Biscuits are an affordable and convenient source of energy, especially for children and
students.
The production of healthier biscuit options (low-sugar, fiber-rich, and gluten-free) will
benefit health-conscious consumers.
2. Support for Small Businesses
Retailers, small shop owners, and vendors will benefit from selling locally produced biscuits,
boosting their income.
The business will collaborate with local supermarkets and online stores to increase
accessibility.
3. Food Security and Self-Sufficiency
Producing biscuits locally reduces reliance on imported snacks, ensuring food availability.
It encourages the growth of the local food processing industry, leading to a more
sustainable economy.

4. Organization and Management

The biscuit production business will be structured as a sole proprietorship at the initial
stage, with plans to expand into a limited liability company (LLC) as operations grow. The
business will have a clear organizational structure to ensure efficient production, sales, and
management.
Organizational Structure
The business will have the following key personnel:
1. Owner/Managing Director
Responsible for the overall management and strategic decisions of the business.
Oversees financial planning, marketing, and business expansion.
Ensures compliance with food safety regulations and licensing.
2. Production Manager
Supervises biscuit production, quality control, and inventory management.
Ensures the use of high-quality ingredients and standard baking processes.
Manages the maintenance of production equipment and machinery.
3. Sales & Marketing Officer
Develops and implements sales strategies to reach target markets.
Manages advertising campaigns, promotions, and branding.
Oversees customer relations and distribution to supermarkets, retailers, and online
platforms.
4. Accountant/Finance Manager
Handles financial record-keeping, budgeting, and cash flow management.
Ensures timely payment of salaries, supplier invoices, and operational costs.
Manages tax filings and financial reporting.
5. Factory Workers (4 Staff Members)
Responsible for mixing, kneading, cutting, baking, and packaging biscuits.
Ensures proper hygiene and safety protocols in the production facility.
Assists with inventory management and stock control.
6. Distribution & Logistics Personnel
Handles the transportation and delivery of finished products to retailers.
Ensures timely distribution and restocking in sales locations.
Business Location and Facility
The production facility will be a rented bakery space in a commercial area.
It will have sections for baking, cooling, packaging, storage, and administration.
The facility will comply with NAFDAC and food hygiene standards.
Decision-Making Process
The Managing Director will make key business decisions.
The Production Manager, Sales Officer, and Accountant will contribute through weekly
meetings.
Employees will receive training on quality control, safety, and customer service.

5. Technical and Production Considerations

This section outlines the technical aspects of biscuit production, including the required
facilities, equipment, raw materials, and production process. The goal is to ensure efficient
operations, high-quality products, and cost-effective production.
Production Facility Requirements
The biscuit production business will operate from a rented bakery facility, which will include
the following sections:
1. Production Area – For mixing, rolling, cutting, and baking.
2. Cooling & Packaging Section – For cooling biscuits and packing them hygienically
3. Raw Material Storage – For keeping flour, sugar, butter, and other ingredients.
4. Finished Goods Storage – For storing packaged biscuits before distribution.
5. Office & Administration Area – For sales, record-keeping, and business management.
Equipment and Machinery Needed
To ensure smooth production, the following machines and tools will be purchased:
1. Industrial Oven – For baking large batches of biscuits.
2. Dough Mixer – For mixing flour, sugar, butter, and other ingredients.
3. Dough Sheeter & Cutter – For rolling and cutting biscuits into uniform shapes.
4. Cooling Racks – For allowing biscuits to cool before packaging.
5. Sealing & Packaging Machine – For wrapping biscuits in airtight packs.
6. Weighing Scale – For measuring ingredients accurately.
7. Storage Racks – For keeping raw materials and finished products.
Raw Materials Needed
The key ingredients for biscuit production include:
Flour – The primary ingredient for making biscuits.
Sugar – For sweetness and texture.
Butter/Margarine – For flavor and richness.
Eggs & Milk – For improved texture and nutritional value.
Baking Powder – For leavening.
Flavoring (Vanilla, Chocolate, Coconut, etc.) – To create different biscuit varieties.
Salt – For taste enhancement.
Packaging Materials – Airtight plastic and paper packs for storage and branding.
Production Process
The biscuit production process will follow these steps:
1. Mixing – Flour, sugar, butter, eggs, and other ingredients are mixed to form a dough.
2. Dough Preparation – The dough is rolled and cut into biscuit shapes.
3. Baking – The biscuits are baked in an industrial oven at the appropriate temperature.
4. Cooling & Quality Check – The baked biscuits are left to cool and inspected for quality.
5. Packaging – The biscuits are sealed in airtight branded packs for freshness.
6. Storage & Distribution – The packaged biscuits are stored and delivered to retailers.
Quality Control Measures
To maintain high product standards, the following quality control measures will be
enforced:
Strict hygiene practices in the production area.
Regular equipment maintenance to ensure smooth operation.
Ingredient quality testing before use.
Random sample testing to ensure consistent taste and texture.
Proper labeling and packaging in compliance with food safety regulations.

6. Demand and Supply Outlook

This section analyzes the market demand, supply trends, target customers, and competitive
landscape of the biscuit production industry. Understanding these factors will help the
business position itself for success and ensure steady sales.
1. Market Demand Analysis
Growing Demand for Biscuits in Nigeria
Biscuits are a widely consumed snack due to their affordability, long shelf life, and
convenience.
The increasing urban population and busy lifestyles have led to a rise in demand for
packaged snacks.
There is a growing demand for healthier biscuits, such as fiber-rich, low-sugar, and gluten-
free options.
Target Market
The business will focus on the following customer segments:
1. Children & Students – Biscuits are a favorite snack for kids and are often included in
school lunch packs.
2. Office Workers & Busy Professionals – Many people consume biscuits as a quick
breakfast or snack at work.
3. Retailers & Supermarkets – Local grocery stores and supermarkets will stock and sell the
biscuits.
4. Health-Conscious Consumers – A segment of the market prefers low-sugar, high-fiber, or
whole wheat biscuits.
5. Event Planners & Caterers – Biscuits are commonly served at events, parties, and
meetings.
Market Size & Growth Potential
Nigeria’s biscuit industry is growing rapidly, with an increasing number of local
manufacturers.
The market is currently dominated by imported brands, but there is a strong shift toward
locally produced biscuits.
The demand for affordable, quality biscuits is expected to increase, especially in urban
areas.
2. Supply Analysis
Availability of Raw Materials
Flour, sugar, butter, and milk are readily available in local markets.
Local suppliers and farmers provide affordable, high-quality ingredients, reducing
production costs.
The business will establish direct relationships with suppliers to ensure a steady supply of
raw materials.
Competitor Analysis
The biscuit industry has several large and small-scale competitors, including:
Big brands (e.g., Beloxxi, McVities, and Rite Foods) – These companies dominate the market
but focus mainly on mass production.
Small & Medium Biscuit Producers – Many local bakeries produce biscuits but have limited
reach.
Imported Biscuits – Some consumers prefer foreign brands, but they are often more
expensive
Competitive Advantages of This Business
To stand out in the market, this biscuit brand will focus on:
Affordability – Competitive pricing to attract budget-conscious consumers.
Unique Flavors – Offering different varieties such as coconut, vanilla, chocolate, and sugar-
free biscuits.
Healthier Options – Introducing low-sugar and fiber-rich biscuits for health-conscious
buyers.
Local Production & Freshness – Providing fresher, tastier biscuits compared to imported
brands.
Strong Distribution Network – Ensuring availability in schools, supermarkets, and online
platforms.

7. Financial Projections and Profitability

This section outlines the expected costs, revenue, and profitability of the biscuit production
business. The financial projections are based on an initial capital of ₦2 million and assume
steady market demand and efficient operations.
1. Revenue Projections
The business will produce three main varieties of biscuits:
1. Butter Biscuits
2. Chocolate Biscuits
3. Coconut Biscuits
Estimated Monthly Sales
Production Capacity: 500 packs per day
Selling Price per Pack: ₦500
Total Packs Sold per Month: 500 × 30 = 15,000 packs
Total Monthly Revenue: 15,000 × ₦500 = ₦7,500,000
2. Estimated Monthly Expenses
3. Profitability Analysis
Total Monthly Revenue: ₦7,500,000
Total Monthly Expenses: ₦4,500,000
Estimated Monthly Profit: ₦7,500,000 - ₦4,500,000 = ₦3,000,000
Break-Even Analysis
The total startup cost is ₦2,000,000.
With an estimated monthly profit of ₦3,000,000, the business can recover the initial
investment within the first month.
Continuous reinvestment in marketing and expansion can drive long-term growth.
4. Long-Term Profit Growth Strategy
Increase production capacity to meet growing demand.
Expand distribution channels by partnering with more supermarkets and retailers.
Introduce new biscuit flavors to attract different customer segments.
Improve branding & marketing to build customer loyalty.

8. Cost of the Project

This section provides a breakdown of the total cost required to establish and run the biscuit
production business. The project will be launched with an initial capital of ₦2 million,
covering equipment, raw materials, rent, salaries, marketing, and operational costs.
1. Capital Expenditure (Fixed Costs)
These are the one-time costs required to set up the production facility.
Industrial Oven: 600,000
Dough Mixer: 300,000
Dough Sheeter & Cutter: 250,000
Cooling Racks: 100,000
Weighing Scale: 50,000
Sealing & Packaging Machine: 300,000
Storage Racks: 100,000
Initial Rent (3 months): 300,000
Office Setup (Desk, Chairs, Computer): 100,000
Total Fixed Costs: #2,100,000
Available Startup Capital: #2 million
Since the available startup capital is ₦2 million, slight adjustments may be made, such as
leasing some equipment to stay within budget.
2. Operating Costs (Recurring Monthly Expenses)
These are the ongoing costs required for daily operations.
Expense Category: Raw Materials (flour, sugar, butter, milk, etc.)
Estimated Monthly Cost: 2,000,000
Salaries (5 workers): 800,000
Rent & Utilities: 200,000
Packaging & Branding: 500,000
Marketing & Advertising: 300,000
Transportation & Logistics: 400,000
Equipment Maintenance – 100,000
Miscellaneous – 200,000
Total Monthly Operating Costs – ₦4,500,000
3. Summary of Cost and Funding Strategy
Total Initial Fixed Costs: ₦2,100,000
Total Monthly Operating Costs: ₦4,500,000
Total First-Month Funding Required: ₦6,600,000
Funding Plan
Since the startup capital is ₦2 million, additional funding will be sourced through:
Personal savings & loans – ₦1 million
Investment from family/friends – ₦2 million
Bank loan or government SME grants – ₦2 million

9. Financial Plan
The financial plan outlines how the biscuit production business will manage its finances,
covering funding sources, revenue generation, profit reinvestment, and financial risk
management. The goal is to ensure financial stability, growth, and long-term sustainability.
1. Funding Sources
The total startup capital required for the business is ₦6.6 million, which will be sourced as
follows:
Personal Savings – ₦1 million
Loan from Family & Friends – ₦2 million
Bank Loan / Government SME Grant – ₦2 million
Initial Business Revenue – ₦1.6 million (from first-month sales)
The bank loan or government grant will be repaid gradually from monthly profits.
2. Revenue Generation Strategy
Sales Projections
Daily Production Capacity: 500 packs
Selling Price per Pack: ₦500
Total Monthly Sales: 15,000 packs (500 × 30 days)
Total Monthly Revenue: 15,000 × ₦500 = ₦7,500,000
Break-Even Analysis
Total Fixed Cost: ₦2,100,000
Monthly Operating Cost: ₦4,500,000
Break-even Point: Within the first month, as projected profit is ₦3,000,000 per month.
3. Profit Reinvestment Plan
To ensure business growth and expansion, profits will be reinvested as follows:
40% for business expansion – Increase production capacity, buy more equipment.
30% for marketing and distribution – Expand sales channels, improve branding.
20% for loan repayment – Repay bank loans or investor funding.
10% for emergency funds – Handle unforeseen expenses and business risks.
4. Financial Risk Management
To reduce financial risks, the business will:
Control production costs by sourcing affordable raw materials.
Diversify sales channels by distributing to supermarkets, schools, and online platforms.
Maintain strict financial records to track income and expenses.
Set aside an emergency fund to handle unexpected business challenges.

10.Risk Analysis
This section identifies potential risks that may affect the biscuit production business and
outlines strategies to mitigate them. Managing risks effectively will ensure the business
remains profitable and sustainable.
1. Business Risks and Mitigation Strategies
A. Market & Competition Risks
Risk: Intense competition from established brands and imported biscuits.
Mitigation Strategy:
Offer unique flavors and healthier biscuit options to attract different customer segments.
Focus on competitive pricing and aggressive marketing strategies.
Build strong brand loyalty through quality and consistent product supply.
B. Production Risks
Risk: Equipment failure or machine breakdowns disrupting production.
Mitigation Strategy:
Schedule regular maintenance of baking and packaging equipment.
Keep backup manual tools for small-scale production during emergencies.
C. Raw Material Supply Risks
Risk: Shortage or increase in the price of key ingredients (flour, sugar, butter).
Mitigation Strategy:
Source ingredients from multiple suppliers to prevent supply disruptions.
Maintain buffer stock of essential raw materials.
Negotiate long-term purchase contracts with suppliers for stable pricing.
D. Financial Risks
Risk: Insufficient cash flow, leading to delays in paying workers or suppliers.
Mitigation Strategy:
Maintain strict financial management and track cash inflows and outflows.
Keep an emergency fund to cover unexpected expenses.
Reinvest profits wisely to support business growth without excessive debt.
E. Regulatory & Compliance Risks
Risk: Failing to meet NAFDAC and other food safety regulations.
Mitigation Strategy:
Ensure the production facility meets hygiene and safety standards.
Get all necessary permits and approvals before launching.
Regularly review compliance laws and adapt to any new regulations.
F. Distribution & Logistics Risks
Risk: Transportation issues affecting product delivery to retailers.
Mitigation Strategy:
Partner with reliable logistics companies to ensure timely delivery.
Have alternative distribution routes in case of road or transport issues.
G. Consumer Preference Risks
Risk: Customers may not like the initial biscuit flavors.
Mitigation Strategy:
Conduct market research before finalizing product flavors.
Offer sample tasting and gather feedback before full-scale production.
Be flexible in adjusting flavors based on consumer demand.