MOBILE FUEL DISTRIBUTION
Introduction
Fuel is a commodity that is used by almost every household. The need to take services near to the people especially in rural and semi urban areas by selling fuel especially kerosene can be a good profitable venture as most people in rural areas buy fuel at relatively high prices. The business idea target is to reduce on the costs incurred by many middle men businesses in the rural and semi urban areas which are reflected in form of price, therefore, it will entail selling at relatively lower price. A quantity of 312,000ltrs of kerosene are estimated to be sold at a sales margin of 13% fetching a total revenue of $360 a year with operating costs of $278,969 annually.
Market Analysis
There exists a wide market in rural and semi urban areas of Uganda.
Investment Scale, Capital Requirements & Equipment.
The investment scale depends on the intended objectives of the entrepreneur. The capital requirements and equipment needed is as tabled below.
Capital Investment Requirements in dollars
Capital investment item |
Units |
Qty |
unit cost |
Total($) |
Delivery Van (2.5-tones) |
No |
1 |
14,500 |
14,500 |
Fuel tank (1,500 ltrs) |
No |
1 |
3,000 |
3,000 |
Funnel |
No |
1 |
25 |
25 |
Furniture & Fixture |
No |
- |
- |
350 |
Total |
17,875 |
Production and Operating Costs in dollars
Direct materials, Supplies and Costs
Cost Item |
Units |
Unit cost |
Qty/ day |
Prod cost/day |
Prod |
Prod
cost/ |
Direct |
||||||
Kerosene |
Ltrs |
0.83 |
1,000 |
830 |
21,580 |
258,960 |
Sub-total |
1,000 |
830 |
21,580 |
258,960 |
||
General Costs (Overheads) |
||||||
Distribution costs (Fuel) |
820 |
9,840 |
||||
Salaries &Wages |
200 |
2,400 |
||||
Repairs & Maintenance |
75 |
900 |
||||
Miscellaneous |
100 |
1,200 |
||||
Office rent |
100 |
1,200 |
||||
Depreciation |
372 |
4,469 |
||||
Sub-total |
1,667 |
20,009 |
||||
Total Operating Costs |
23,247 |
278,969 |
1) Production costs assumed 312 days per year with daily supply of 1,000litres of kerosene.
2) Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
3) Direct costs include: materials, supplies and other costs that directly go into production of the product.
4) Total monthly days assumed are 26 work days.
5) The valuation currency used is United States Dollars.
Project Product Costs and Price Structure
Item |
Qty/day |
Qty/yr |
Unit |
Prod |
Unit price |
Total Revenue |
Fuel(Kerosene) |
1000 |
312,000 |
0.89 |
278,969 |
1.03 |
321,360 |
Profitability Analysis Table
Profitability Item |
Per Day |
Per Month |
Per Year |
Revenue |
1,030 |
26,780 |
321,360 |
Less: Production & Operating Costs |
894 |
23,247 |
278,969 |
Profit |
136 |
3,533 |
42,391 |