A Business Plan: Crab Farming


1|P age

A Business Plan: Crab Farming

1.1 Origin

This report has been prepared as a requirement of the course Entrepreneurship . The report is on A Business Plan: Crab Farming which was assigned by A.K.M. Saiful Majid, Course-Instructor of Entrepreneurship, Institute of Business Administration, University of Dhaka.

1.2 Objectives

The purpose of this report is to get an exposure to the real world situation of entrepreneurship and businesses in Bangladesh. This study will give me the opportunity to experience businesses are done in Bangladesh and how innovative ideas for business p lan can be implemented in the real life scenario. 1.3 Scope

The scope of the report is limited to the opportunities associated to the business, Crab Farming in Bangladesh. Thus the concentration has been given to those parts only. The report covers the whole plan including financial plan, marketing plan, management and projected profit of the business plan.


The entire study took place in the following stages: y Going through the secondary materials to devolop a better understanding business ventures in Bangladesh, and the secondary sources include: Business related websites, magazines, national and international newspapers, journals.

The study requires a systematic procedure from selection of business plan topic to final report preparation. To perform the study information sources are to be identified and collected, they are to be classified, analyzed, interpreted, and presented in a systematic manner and key points are to be found out. This overall process of methodology is given below in the form of flow chart we have followed in the study.

2|P age

A Business Plan: Crab Farming

Flow chart of methodology: Selection of business plan

Identifying information sources

Collection of information

Classification, analysis, interpretation, and presentation of information

Findings of the study

Final report preparation

1.5 Limitations

I faced some limitations while preparing this report, among which is making textbook knowledge compatible with real life scenario while talking to the organization, whi ch was sometimes disappointing. Again, this report is the first of its kind prepared by me. This also proved to be a limitation. The main limitation of this report would be the lack of organized data. Data that were collected from various sources took a lot of time that restricted collection of any further information. This might have restricted the chance of gathering important primary data that could be collected through interviews.

3|P age

A Business Plan: Crab Farming COMPANY OVERVIEW 4|P age .

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hui • ˆ ˜ ‡‚e ˜‡‚  ‡…wx…–  ‚€…˜‡x …x …y…d ‡x…“ ‘ˆ x ‘ x‘w  ’x ƒ… ƒ‡…ˆ … ‡x †… — … xƒ ˜‡x „ƒ‚€ ‡x „‰x‡„ ‡… €“‚ ‘– ”…“ yyxw x‘– • x € xˆxˆ €“‚ … ˆ… y€€„ ƒ ‡… †… ˆxy… „‰ —‚ ‡‚xˆ „ƒ‚€ w‚yy… yyxw ‘– • ˆ „ƒ‡x ƒ‚‚—… ‘ˆ  ƒ‡„ yy…— ‡x „† x‘– •ˆ ”…“ y…†‚y ‘ˆ ‚ˆ “ ‘ˆ ug tqis riqp gi : i ffhg fe i SS s c ce c s e G c cess e s e y s e e s s ess s e e se s y e c e ec y c s F c ve e cess yc s s y c e v e ce s e e c se se ee c s s s e c s e e s HG s y e e s e c s H ec e e ƒ ‡… ‘ˆy… ‘ ƒ‡… ’x ‡x ‘ˆ ‚†  ˆxy… „‰  „ ‡ ‚ˆ ‚€ ƒ yy‚ˆ‡‚ … ‡x †… „ƒ‚€ yyxw y y e e c e ‚€ ‘ˆ  ‚ y‚ˆ‡‚ yy„ • †… “…— ‚ˆ ˜‚y‚‡‘ ˆ „ˆy„ …„‰… ˜‡x’xyxˆ„ † yyxw ‡… €“‚ y€€„ c e e e ys S y e e — ‚ ˜‡x x€“‚ ˆ ”…“ ‡…x ™ ‘ˆ ˜‡xˆ ˜…ˆ y‡x…“ x •  ˆ‚ €“x ‘ˆ —‚ ˆ‡ “ x„‰  s e ec e 18% e SS ce 9 000 s 6 ye s ‡…‘ˆ ‚“ „ˆ€… yyxw ƒ‡… ‘ˆ ‡‚“  € †… ˜”  ˆ x— ‘ˆ ‡x‘ˆxw ˆ ”…“ ‘ˆ —‚ „ƒ‚€ yyxw ˆ…‘ˆ ƒ ˆ €g x ˆf e e c s e s AB c Pl e 6 P v • … e .

A Business Plan: Crab Farming PRODUCTS 7|P age .

z  Frozen mud crabs will be offered both in plate freezing in numbersand IQF(Individual Quic Freezing) formats.  The company will provide the local crab farmers with crablets. Live mud crabs will be offered in batches of 100 gs in both 400 and 500 grams per piece categories. rj qnlp olnm jl : i 8 P krl s iikj ih t . S Primary focus will be placed on the breeding andrearing processes to ensure the highest quality using the most efficient system possible.AB i Pl Produ ts offered  Scy Se will offe c le s of mud c ( cylla Serrata) and culture them. The company plans to start production of frozen crabs from the third year of the initial venture. yvw x yvw w vxvww vuu  SS will also offer live and frozen mud crabs of high quality. {  All the products will be healthy and free from diseases.

A Business Plan: Crab Farming MARKET ANALYSIS 9|P age .

Bangladesh on the coastal plain at the apex of the Bay of Bengal and covers approximately 14. They are targeted towards different geographical locations. Culture of freshwater and marine fish. the elevation ranges from sea level to 5 m above mean sea level. This indicates a growing market for the company. In 1982 1983. The growth rate of worldwide aquaculture is very rapid > 10 per year for most species while the contribution to the total from wild fisheries has been essentially flat for the last decade. The fresh and coastal water resources are the most abundant in the country. Fisheries play an important role in the regional and national economy and the area is one of the most promising for aquaculture. crab etc . lobster. and habitat for shrimp and other cultivable species. there were only 5200 ha of land under shrimp culture. The rapid increase in the demand for seafood has created a new market for seafood products like shrimp. 000 ha had been brought under shrimp cultivation. not least because of the low production costs. The area lies between 21j30V and 23j15V North and 89j00V and 90j00V East and includes the world s largest continuous mangrove forest. shrimp and other crustacean species are highly important as they can be easily integrated with other activities such as agriculture and livestock rearing. Bangladesh has extremely favorable conditions for crab farming and shrimp culture. 110. prawn. 70 being located in the Khulna region. The terrain is relatively flat. As a result it will offer three different products. In fact.000 km. and milkfish in Southeast Asia. Statistics say that Malaysia alone imports 2 tons of crab every day. canals and their tributaries. the demand of Crabs in the international market is so high that Bangladeshi exporters can hardly meet it. SS targeted the market into different segments. The presence of the world s largest continuous mangrove forest provides food source and nursery for the offshore fishery. aquaculture contributed more than 30 of the world s total production of fisheries product. mud crab S. The product with the 10 | P a g e } | ~ | . the Sundarbans.2 Market Demand and Segmentation For the last five years. estuarine marshlands and numerous rivers.A Business Plan: Crab Farming 4. | ~ } 4. protection of the coasts from storm surges and cyclones. serrata has been an incidental product arising from the culture of shrimp. recreation and tourist services. domestic and commercial products.1 A comparison of development opportunities for crab and shrimp aquaculture in southwestern Bangladesh The study area lies 300 km southwest of Dhaka. by 1996. By contrast.

The major competition would be from countries like China. the competition will also be global. SS will face almost no domestic competition. So. they too are dependent on nature for their crablets. making it the major bottleneck in producing crabs. But there is no scientific method for breeding crabs or collecting. However. due to problems such as Flight schedules and time involved.   Figure: Suitable land for crab farming P ‰ ˆ…ƒ‡ †ƒ…„ ƒ : i ‚‰ƒ ‹ ŠŠ €€‚ € .AB i Pl most demand is live crab. Indonesia. the product cannot reach the market. there is a practice going on like collecting crabs by fishermen and some other people unofficially and if those crabs meet the quality in weight then those are sold or e ported. but The Company is only targeting the Asian crab market with this though the US and EU is a huge market as well. So. These countries have a set distribution chain and are e porting at a much larger scale. Philippines and India. Competitors Abroad: As the company is targeting the world crab market. Even after using scientific methods to fatten crabs. 4 3 Competition Œ SS will face strong international competition but almost no competition in the countr y though both are discussed below: Competitors in Bangladesh: In Bangladesh there is no crab farm.

A Business Plan: Crab Farming MARKETING PLAN 12 | P a g e .

 Natural disasters. Strong preventive measures against diseases. ong Kong.2 Marketing Strategy 5. Taiwan. This targeting has been done following geographic segmentation.A Business Plan: Crab Farming 5. Existence of dedicated breeding farm. Threats  Lack of flights available to destination countries.2. Japan. The countries of this region like China. Strict quality control.  Incorporating newer and better technologies in our processes.  Outbreak of diseases. Opportunities  Nonexistence of bred crablets in Bangladesh.  Better size and quality of products. Ž 13 | P a g e .1 Target Market Scylla Serrata s target market is East Asia. Korea. and Malaysia are the main target. 5. Weaknesses  Limited production capability.  Transport delays may result in loss of shipment.1 SWOT Analysis Strengths     Practice of Scientific method.

Television ads will be very nominal as it has been found that there is little impact of television ads for this industry.A Business Plan: Crab Farming 5.3 Distribution Channel The distribution channel of Scylla Serrata consists of fisherman. The other facilities. specially the grooming facility will be advertized heavily in the newspaper. The business will send brochures through fax and e-mails. additional promotional activities will be carried out which would increase the promotional budget. For that reason there will be a huge budget allocated in this sector and this investment is very much justified. bapari intermediary . As our sales increases.2. billboards in selected areas. and finally exporter.2. 5.     14 | P a g e . and contact its clients through telephone or e-mails to maintain a profitable client-producer relationship The firm will also rely on ads in newspaper and magazines. Consequently. The pricing strategy will vary according to various regions and according to competitive advantages. But the firm will look for publicity for the various promotional plans. SS will attract new clients and capture new markets. 5.2 Pricing The main strategy of the pricing of the firm is to provide high quality with medium price thus maximizing sales. arotder wholesaler .3 Promotion The Board of Directors has detected promotion as th e main competitive tool and wants to emphasize on it a lot. In promotion of a service industry. Since the customers of SS consist of buyers. the business will adopt integrated direct marketing in order to promote its crabs. have its own website where orders can be taken online. the main effective tool will be percentage-of-sales. The company will also follow direct marketing in some cases. so that it can cut costs by eliminating the intermediaries.

A Business Plan: Crab Farming ORGANIZATIONAL PLAN 1 |Page ‘ .

the ownership is of the business will remain in the hands of these two partners. Khaleque and Mr.  In case of any partner s inability to participate. 2. Investors will be treated as shareholders and therefore will not be liable for more than their individual personal investment. In the first place the structure must reflect objectives and plans because enterprise objectives derive from these.700. The application of the principle of unity implies of course the existence of formulated and understood enterprise objective. Both of them contributed BDT.  Profit will be shared in the ratio of the capital invested by each owner.A Business Plan: Crab Farming 6.2 Organization Scylla Serrata will be a partnership.5%.00 and additional loan has been taken from the bank with an interest tate of 15.  The CEO will be elected in a democratic order from the owners.  The CEO will receive a pre-determined salary for his service to the business along with profit. So. his successor may take control of his shares and the partnership will continue with the previous deed. Shahed. In the second place the structure must reflect the authority available to enterprise managers. 6.000. In looking at organizing as a process several fundamental inputs must be considered. As the company s objective is to make profit over a period of time. In the third place organization structure like any plan must reflects its 1 |Page ’ .  All decisions will be taken democratically.1 Ownership Scylla Serrata is going to start up with the partnership of Mr. The main clauses of the contract include:  The owners will provide capital equally. An organization structure is effective if it facilitates the contribution of individuals in the attainment of enterprise objective. the organization pattern that will help to accomplish this conforms to the principle of unity of objective.

6.3 Personnel Plan Scylla Serrata consists of production department and sales and promotional department. 1 1 1 10 4 17 Labor full time “ “ Mechanic part time Security 2 4 Sub Total 25 Sub Total 17 | P a g e . Obviously the activity groupings and authority provisions of an organization structure must take into account people s limitations and customs. The personnel plan is given below: Production Manager ” No. 1 18 ” Sales and Promotion Manager Accountant Assistant Staff Security No. Fourthly the organization must be staffed with people.A Business Plan: Crab Farming environment. The internal management of this company is developed keeping in the above-mentioned matters into consideration.

A Business Plan: Crab Farming PRODUCTION PLAN 1 |Page • .

Also. In culturing phytoplankton. And filtered seawater with a salinity of 25-30 ppt is used for the culture and sterilize all the containers before use. the water temperature is maintained from 20 °C for indoor -25 culture and good aeration is provided to give enough supply of carbon needed for plant growth. We start culturing them in one-liter capacity bottles.5 to 1 ton. The first step tophytoplankton culture is obtaining an algal starter from laboratories or institutions that are selling them. When the phytoplankton has bloomed and the density is 3 to 5 x 105 cells/ml. urea (21 -0-0) and ammonium phosphate (16-20-0) is used to supply the essential nutrients needed by the algae.  ˜ Ÿœšž šœ› ˜š : i P ™ š £ ¡ ¢ ——™˜ —– ¦ ¦ ¦ ¤ Crabs >500gms Export . they are transferred to a 0. Nannochloropsis. for bigger culture. we transfer them to ten-liter carboys.AB i Pl 7 Produ tion 7-8days Mother Crab/ Brood stock incubation (78days) Larvae Larvae (identification period) 2 months Fattening (2025days) Crablets (180200gms) Figure: Production Process 7 1 The produ tion pro ess ¥ 7 1 1 ood produ tion § ¥ ¥ Mud crabs feed on phytoplankton and zooplankton. Upon reaching the same density. Chlorella.tank where they are allowed to bloom more. and Tetraselmis are the commonalgae.

trash fish. Organic fertilizer is applied to encourage the lab -lab to bloom. wheat are used as feed for crab fattening. There are two methods of spawning: the natural and the induced. the mud crab is left in the tanks until they become sexually mature and spawn. The amount of feed given is 10% of body mass. As soon as the broodstocks and spawners of the king crab arrive at the hatchery.2 Rearing of larvae in nursery The nursery tanks are lined with soil 10 cm thick inoculated with lab-lab. Allan Failaman. After fertilization. Mud crabs become mature and mate when they are 4 months old.4 Broodstock management and spawning The major source of broodstock is the wild-caught post juveniles or half-grown crabs while adult or berried female crabs are used as spawners. Lime and chicken manure at 2 kg 10-ton tank and ammonium phosphate at 500 grams per tank is applied. The king crab is sexually matured when the width of its carapace reaches 14 cm and it weighs 450 grams while the other mud crabs can spawn even if its carapace is still below 10 cm and weigh 300 grams.3 Crab fattening Unused fishery products such as Shrimp heads. In ponds or tanks.A Business Plan: Crab Farming 7. The water is changed at least 30%).000 per cubic meter. 7. For large tanks. ­ ­ ¬« 7.1. In the natural method. male and female crabs clasp for 5 to 7 days to fertilize the eggs. © ¨ ª Sou : A guid to hatchery and nursery production of mud crab (Scylla serrata) juveniles by Romeo Fortes. The fish are cut into small pieces and given to the crabs once a day every evening. They are fed daily with shrimp head and trash fish at 10% of their biomass.1. ® 20 | P a g e . Juliana Baylon.they are placed in the tanks at 300 spawners per tank and 1000 broodstocks per tank with a 10 cm sand substrate at the bottom. A minimum weight of 200 to 300 grams for broodstock and 450 grams for spawners are desired. the sides scrubbed of the tank and excess feed removed daily. the megalopae is transferred at a density of 20. they are lined with mud substrate that has been seeded with lab-lab.000 to 30.1. Evelyn Marasigan.

P level is kept between 7 and 8.1 mg liter ² ² ² ² Oxygen CO2 Ammonia Nitrate ± P 21 | P a g e . 1 Bigha or 40 square meters of land is used for a single pond.1. They are kept here for another 7 -8 days ¯ ° ¯ 7. Salinity level is maintained between 10-12 PPT. the larvae are transferred into the large tanks filled with 5-10 tons of filtered seawater with 34 ppt salinity. Algae and rotifer is added at a rate of 5 x 10 3) cells per cubic meter and 25 ind ml. G is using 20 ponds round the year in different time periods to keep production steady. they are fed more until the eggs are hatched. Lime is applied to control the alkalinity of the water. ± ± ± Element Salinity Temperature Level 10-22 PPT 22-28 Degrees >4-8mg liter 0. The sides are partitioned with bamboo with up to 20 centimeters underground. 20 Kilograms of Urea and 10 Kilograms per ector. the berried pregnant) crabs are transferred to another tank without the substrate.A Business Plan: Crab Farming Since ablation increases the appetite of the mud crabs. At this time.5 Fattening pond readying Ponds specific for fattening have to be at least 1 meters deep.02 mg liter 0.5-8 <0. respectively. Manure is used on the ponds on the basis of 500 Kilograms of cow dung.04-10 mg liter 6. Incubation ranges from 7 to 13 days. The eggs are expected to hatch when the eggs turn from light orange to dark grey After the eggs are hatched. These ponds are readied before every harvest.

loading etc. Whole ponds are captured at once. Using a smaller density will result in a wastage of space.A Business Plan: Crab Farming 7. foam box and bamboo boxes are used. Then they are packed using the preferred packaging instructed by the buyer. They are carefully packaged into plastic baskets so that too much pressure is not put on them. the consignment is sent to the airport using pick-ups. it is received in Dhaka office in next day morning. After finalizing the packing. 25 Kilograms of crabs are packed into each baskets. 7. These baskets are transported to the sales and promotion office in Dhaka. Proper feeding with 10% of body weight takes about 20-25 days for the crabs to reach full size. The temperature at that time is better suited for crabs and mortality rates for transportation is drastically reduced.2 Capturing and Transport When the crabs are full grown. Chlorinated water is used in the ponds. Then the goods are sorted as per order of the buyer. Their claws are tied on the spot and they are brought to the work area for cleaning and packaging. ³ 22 | P a g e . 7. the client will inform G about the mortality rate and then the sales figures are adjusted.3 Export After sending the consignment from the farm. Transportation is usually done during night. this provides better growth. It is received the product there necessary actions taken for the shipment procedure including duty. Measures are taken to prevent viruses and other diseases.6 Crab fattening The crablets weighing 180-200 grams are stored in the fattening ponds of 40 squire meters at a density of 2 per square meter.1. Certain grading systems are followed to sort the crabs. After receiving the shipment. For packaging option plastic box. Using different ponds for male and female and proper feeding eliminates cannibalism among the crabs. Though denser fattening is possible. they are captured.

A Business Plan: Crab Farming FINANCIAL PLAN 23 | P a g e .

000. Interest rate: 15. Inflation: 10%.00 4.5%. issues a 5 year tax holiday.5% Amount 5. WACC is calculated below: Particular Equity Debt Value WACC Cost of Particular 20% 15. As most of the insurance companies are not willing to insure against natural disasters in fisheries sector.000. Salary growth rate: 10%.A Business Plan: Crab Farming For the financial plan for Scylla Serrata. Discount rate: WACC 17. Mortality rate: 32%.00 10. Cost of goods manufactured and balance sheet for four years are given in the appendiz.86% 24 | P a g e .00 17. Almost all the costs are adjusted to the inflation rate.400.900.86%.000. I have made some key assumptions: Tax rate: For 80%-100% export oriented businesses govt.300. a provision has been kept to adj ust any loss incurred due to disasters.

A Business Plan: Crab Farming 8.000.00 Electricity.00 per piece Assets Needed Current Assets Cash Rent Total Long-term Assets Land Acquisition Development Fencing Total Building Building Decoration Tanks Total Machinery Oxygen Pump Ultra Violet Ray Machine Pump Machine Generator Total BDT BDT BDT 300. 120.00 35.200.00 100.00 402.000.900.000.000.00 8.00 per Bigha BDT BDT BDT BDT 8.200.00 248.00 25.00 400.00 50. Initial Investment Initial Costs Start Up Tools Utility Setup Legal Charges Decoration Web Development Weight Machine License Fee Total Initial Costs BDT BDT BDT BDT BDT BDT BDT BDT 20. etc.00 100.000.00 2 |Page ´ . 1 toilet. 50.00 BDT BDT BDT BDT BDT 50.00 3 rooms.400.00 245.000. Water Lights.000.400.000.000.00 10.00 125. hatchery BDT BDT BDT BDT 292.00 36 Bigha. Internet.000.00 60.00 60. 250.00 3. 5 pc.000.000.1 Startup Costs Start up costs account for a total value of BDT 10.300. Glass Partitions. 1.00 5.

Below is shown the startup funds: Sources Loans Capital Mr.800. 2.051.400.000.000.00 2 |Page µ .00 per piece Furniture-office Chair-executive Sofa Double seated Table 2 pc.400.00 2.000.00 2.00 per piece Total Total Assets Needed Total Required BDT BDT BDT BDT BDT BDT BDT BDT BDT BDT BDT BDT 12. 104.000.00 10.000.800.00 10. 2.00 25.900.300. 5.000.00 7.00 12.00 10.000.00 6.00 per piece Fans 2 pc.00 per piece Table 3 pc.00 4. 6.00 per piece Fan 3 pc.00 15.A Business Plan: Crab Farming Furniture including officefurniture Chair 6 pc.300.00 per piece Air Conditioner Cabinet 3 pc.700.00 Khaleque Mr. Shahed Total BDT BDT BDT BDT 4.000.2 Startup Funds The startup funds are collected from the investment of the two partners and borrowing from the bank.000. 1.00 5.00 18.

Since the With initial monthly expenses of over tk. and therefore conservative.158.218. We expect to reach break-even a few months into the second year of business operation.319.000.08 100% 69.781. In the 21st month we open.3 Break-even Analysis The following chart and table summarize our break-even analysis.561.79%.463.79% 27 | P a g e .25) 1.143.2 years ¶ Sales Variable Expense CM Fixed Expense Net Income 4.877.21% 30.117.298. The break-even assumes variable costs of 79% percent of sales.75 -758.280. This assumption is probably too high. NPV IRR Payback Discounted Payback Tk.719.50 47% 1.67 521. we may achieve goal and break even CM Ratio Break Even 31% TK.561.73 years 2.A Business Plan: Crab Farming 8. 758. 6.00 Although the net income may rise at a slow pace with an increase of sales due to low CM Ratio of 30.95 to break -even.00 2.657. it shows that SS is a very stable business and it is less vulnerable to downturns during any unfavorable circumstances.67 we will need averaged monthly revenues of about tk. 2.

54 13.00 2 |Page · .00 1.15 15% 7.59 0.96 1793067.81 3137170.35 10% 25% Year 3 3.31 11.49 13% 28% Year 2 5.50% 8 Balance remaining 4549524.4 Ratios Main Ratios Current Ratio Quick Ratio Profit Margin on Sales Equity Ratio Accounts Receivable turnover Total Asset Turnover Interest Burden ROA Year 1 4.67 4144725.A Business Plan: Crab Farming 8.37 3.69 5% 23% 8.85 720389.33 404799.86 5.46 148957.34 486261.01 467542.48 389585.87 961017.90 1.46 961017.00 705176.85 540011.64 16% 2. of year Year 1 2 3 4 5 6 7 8 Interest 759500.00 15.59 4900000.86 4.99 623713.32 642432.66 15% 3.50 832049.48 569963.82 2513456.95 12.83 277925.73 Principle paid 350475.70 1.5 Loan Amortization Schedule Total Loan Interest Rate No.66 3677182.

A Business Plan: Crab Farming CONCLUSION 29 | P a g e .

crab farming in this region can change the luck of the mass population of this particular area. This venture will create a new trend in the market generating high profit while utilizing the unutilized resources that are remaining idle. The scientific method. proper nurturing in the production process will ensure best quality. water and geographical location of Khulna district can be a huge potential for crab farming. By delivering quality products. The product will be hea lthy and disease free by looking after for diseases in regular interval.A Business Plan: Crab Farming Conclusion The present status of suitable environment for crab farming in Bangladesh indicates that if proper steps at proper time can be taken crab farming business should boom within the five years of the startup. live and frozen crabs with less costs can be the attracting features of SS. So. 30 | P a g e . The soil. Scylla Serrata has the great possibility to earn a huge profit because this crab farming business in Bangladesh is like a blue ocean. So. it is more likely to achieve its expected market share within the first five years. Scylla Serrata will break even in the 21 st month and thus it will fulfill the requirements of the investors.

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