Business Name and Address: Shea Butter Production & Sales ... The business is
currently processing one bag of shea nuts a week to make 2 calabash (local.
Kingdom Business Plan and Summary February 2011 Name: Sakina Address : Nalogba, Northern Region, Ghana Business Name and Address: Shea Butter Production & Sales
Executive Summary Business Description This business is a shea butter production and sales business. The product is processed near Sakina’s, the owner and operator, home in the village of Nalogba. The production process involves cracking, roasting, milling, separating oil, boiling, and cooling. The business is currently processing one bag of shea nuts a week to make 2 calabash (local bowls used for measurement and packaging). Sakina would like to increase her production to process three bags of shea nuts each week which will create 6 calabash of shea butter. She expects enough demand to sell all the additional shea butter in the same amount of time.
Kingdom Impact Sakina sells her shea butter in the weekly Yendi market. In the market there are many shea butter sellers but Sakina is always among the first to completely sell her product. She is continuously asked why this happens and always responds that the only reason is because of the God she serves. This opens the door for her to share about Christ and many times the other shea butter sellers will ask her to pray for them. Sakina does develop relationships with these ladies in the market and will follow-up with them but many are very afraid of becoming a Christian because of rumors that are spread by the Muslim and traditional idol worship majority. However, many of them have begun sending their children to church to learn of God. Two of her husband’s younger brothers have come to know Jesus because of her lifestyle, including the way she does her business.
Investment Required The investment required to increase Sakina’s shea butter business from 2 calabash per week to 6 calabash per week is 360GHS ($254USD). Loan to be paid back in 6 monthly installments of 69GHS over a half year period. There is a one-time service fee of 15%. First payment to be due at the end of the second month after loan inception.
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Business Overview Business Description Sakina produces and sells shea butter from her home in Nalogba. Nalogba is a very small Dagomba (mostly Muslim) village that is a 20-minute car drive from Yendi town in the Northern Region of Ghana. Sakina currently produces two calabash bowls full of shea butter per week. This is the product of one five pound bag of shea nuts. The process of shea butter production is as follows: • Once the raw nuts are purchased they are cracked by pounding and then roasted. • The roasted nuts are carried to a nearby village where there is a grinding mill. • After paying to have the nuts ground, they are carried back to Nalogba as a paste. The next steps are very important as they will determine the color and quality of the shea butter. • Shea nut oil is extracted from the paste. The more time and attention that is put into this step determines the clarity of the oil. • The oil is then boiled to reach the appropriate consistency. The best method is to bring the oil to a boil and then decrease the temperature to a low boil or simmer. • Once the oil has boiled, it cools and solidifies into soft shea butter – the finished product. Sakina is asking for a loan to increase her business to 6 calabash of shea butter each week. Shea butter is in demand all year but the price does change to indicate high and low seasons. The price is high starting in May through early July. The price then decreases for late July through April. While shea butter is a very profitable product year-round the low price season provides the highest profit margins and lasts for 9 ½ months. Sakina travels to Yendi on market days to sell her shea butter. She pays for transportation for herself and her product. Yendi market charges a flat tax of 50 pesewas (similar to cents) to sell product there. Yendi market is held every six days and therefore can occur four or five times a month depending on timing. Sakina sells 2 calabash full of shea butter at each occurrence of the Yendi market. She is certain that the market can support the entrance of an additional 4 calabash.
Risks & Opportunities Risks – One risk in increased shea butter production is if she purchases bags of poor quality shea nuts. Some sellers will put good shea nuts at the top of the bag but fill the bottom with bad shea nuts. This can be avoided by asking the seller to measure out the bag in front of her. Another risk is decreased quality in her production process since she will be hiring workers from 2
her village. This risk can be addressed by close personal supervision and accountability. Sakina will personally monitor the purchase of shea nuts and the production process. Opportunities – With increased production and profits, Sakina will have the opportunity to invest in other grains and farm products when the prices are low and sell them when the prices increase (normally during dry season).
Biography of Candidate Sakina is married and has six children. Her youngest, Diana, is currently 7 months old and attends each day of training with Sakina. Sakina’s husband, Alhessen, is a farmer on local farmland and the church leader of the Nalogba church. As a member of the Dagomba tribe, Sakina was raised Muslim. Sakina was first introduced to Christianity through a literacy program that started in her village. The literacy program (Dagbani and English literacy) is run by Christians who also share Christ with the participants. Sakina’s husband was a participant in the literacy program and became a Christian while in the program. Sakina refused to believe in Christ because of fear. Eventually she came to respect her husband’s belief and the belief of other Christians around her because of their love and behavior. Through their example she became a Christian. After coming to Christ, Sakina, like many Dagombas, endured persecution from the Muslim majority in her community. Her neighbors would ridicule her for going to church and act out towards her (in a nonviolent way), but once they realized that her commitment to Christ was strong, they quit. The Christian congregation of Nalogba is 25 people, there are 19 Christians in Nalogba and 6 to come from a nearby village.
Company Structure Sakina will operate the shea butter business herself. With the requested increase in production quantity she will hire one employee from her village. This employee will help with the processing of the shea nuts as well as the transportation to and from the grinding mill. Sakina will pay the employee 1GHS per day and will need him or her two days each week. Sakina will not be involved in any other business or revenue producing activities.
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Marketing Industry and Market Overview The shea butter market is thriving in northern Ghana. Shea butter is a product used locally in household cooking in cakes, rice and beans, fried yams, etc. and is also used in soap and skin products. Shea butter is also used commercially in pomade, hair cream, and soap. Only the larger towns have markets large enough to sell shea butter, so buyers know where to go to purchase shea butter. Yendi is one of the few markets in the region that sell shea butter.
Customers Sakina sells to men and women as well as commercial buyers from the southern cities of Kumasi and Accra.
Competition Sakina sells shea butter in the Yendi market. Within her stall in the Yendi market there are 20 – 30 others selling shea butter and there are several such stalls in the Yendi market. Included in her stall are seven others from Nalogba who make shea butter and sell it in the Yendi market. Sakina is the sister-in-law of Adisa, another Videre participant who also produces shea butter in Nalogba. Although much competition exists, the demand for shea butter remains large and unmet. Since shea butter is sold to individuals and commercial buyers there are many who buy the product.
Pricing and Distribution Shea butter is always picked up in the market by the buyer. No delivery is necessary; therefore the sales price is consistent regardless of the buyer’s destination. The shea butter price does vary depending on the season. During high season shea butter can be sold for 30GHS per calabash. During the low season shea butter can be sold for 25GHS per calabash. Although the price is lower the profit margin is higher in low season.
Promotion Sakina sells her shea butter in large calabash bowls. The only manner of differentiating her product from the other shea butter sellers is to vary the quality and color. Roasting and boiling are both points in the production process that can determine if the shea butter will be clear and light in color or will be dark, and this influences quality. Dark shea 4
butter is perceived to be lower quality. If the shea nuts are roasted too long the oil and butter will be dark. Similarly, when the oil is separated from the paste the boiling process must occur at the correct temperatures or the oil will turn dark. Sakina can introduce a leaf or root during the preparation process and can vary the color from a light green/white color to a yellowish color, respectively. Different buyers prefer different colors. Sakina can find out which buyers will be in the upcoming Yendi market day and adjust the coloring of her shea butter accordingly. Kumasi buyers prefer light green/white while the Accra buyers prefer yellow. Since shea butter is sold in large calabash there is no other packaging that can be taken into consideration.
Financial Startup Costs One-Time and Startup Items Tools and Equipment (see below) Equipment Installation & Prep. Starting Inventory Veterianary Fees Advance Rent Other Fees (legal, etc.) Licenses and Permits Initial Advertising & Promotion Operating Cash Total Start-up Expenses
Tools and Equipment XL pot L pot Basin Water Container Calabash Frying Machine Firewood
Unit Price Number in cedis of Units 60 1 40 1 20 1 60 1 3 6 60 1 2 3
Total Tools and Equipment
cedis 261 9 90
$ $183.80 $6.34 $63.38 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
360
$253.52
cedis 60 40 20 60 15 60 6 0 261
$ $42.25 $28.17 $14.08 $42.25 $10.56 $42.25 $4.23 $0.00 $0.00 $183.79
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Investment Required The investment required to increase Sakina’s shea butter business from 2 calabash per week to 6 calabash per week is 360GHS ($254USD).
Financial Plan Financial Investment Required
Loan Amount (Principal) One-time Service Fee Percentage Number of Years Months before First Payment Monthly Payment Amount Total of all Payments Total Service Fee Paid
cedis 360
$ $253.52
69
$48.59
414 54
$291.55 $38.03
15.00% 0.5 1
Loan to be paid back in 6 monthly installments of 69GHS over a half year period. There is a one-time service fee of 15%. First payment to be due at the end of the second month after loan inception.
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Financial Projections Projected Income Statement Sakina - Shea Butter Year
(all amounts are in cedis)
1
2
3
Incom e Shea Butter, low season
1,500
1,500
1,500
Shea Butter, high season
6,840
6,840
6,840
Gross Sales
8,340
8,340
8,340
3,870
Expenses Cost of Goods Sold
3,870
3,870
Wages
96
96
96
Firew ood
282
288
288
Calabash bow ls
705
720
720
Grinding mill
720
720
720
24
24
24
Transportation
336
336
336
Loan Payments
414
0
0
6,447
6,054
6,054
1,893
2,286
2,286
4,179
6,465
Tax
Total Expenses Projected Cash Flow Cash Profit Loan Proceeds Start-up Costs Cash Flow (Cum ulative)
360 360 1,893
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Projected Income Statement Sakina - Shea Butter
(all amounts are in $)
Year
1
2
3
$1,056.34
$1,056.34
$1,056.34
Incom e Shea Butter, low season Shea Butter, high season
$4,816.90
$4,816.90
$4,816.90
Gross Sales
$5,873.24
$5,873.24
$5,873.24
$2,725.35
Expenses Cost of Goods Sold
$2,725.35
$2,725.35
Wages
$67.61
$67.61
$67.61
Firew ood
$198.59
$202.82
$202.82
Calabash bow ls
$496.48
$507.04
$507.04
Grinding mill
$507.04
$507.04
$507.04
Tax
$16.90
$16.90
$16.90
Transportation
$236.62
$236.62
$236.62
Loan Payments
$291.55
$0.00
$0.00
$4,540.14
$4,263.38
$4,263.38
$1,333.10
$1,609.86
$1,609.86
$2,942.96
$4,552.82
Total Expenses Projected Cash Flow Cash Profit Loan Proceeds Start-up Costs Cash Flow (Cum ulative)
$253.52 $253.52 $1,333.10
Action Plan Date
Item
March 2011
Purchase 3 bags of shea nuts to begin increased production immediately
March 2011
Purchase required start-up tools for increased production
March 2011
Sell increased product inventory in Yendi market weekly
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