Mary Akonsi, Shea Butter Reseller. Executive Summary. October Business Description. Kingdom Impact. Investment Required.

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1 Mary Akonsi, Shea Butter Reseller October 2012 Name: Mary Akonsi Location: Yendi Business Name and Location: Alaafee (Good Health) Shea Butter, Kumasi Kejetia Market Executive Summary Business Description Alaafee Shea Butter is owned and operated by Mary Akonsi. Mary buys shea butter in Yendi, northern Ghana, and resells the shea butter in Kumasi, southern Ghana. Shea butter is an extremely versatile product and is used in food preparation, cosmetic products (like lotion and hair cream), and has other everyday uses. Shea nuts are only found in the northern part of Ghana. In major cities in the South, such as Kumasi and Accra, the demand for shea butter is high and the prices are significantly higher than in the North. Mary currently sells 10 sacks of shea butter every 1-2 weeks. She buys shea butter from six suppliers (shea butter producers) in Yendi market. She transports her shea butter by lorry (market truck) to Kumasi, where she sells her shea butter to mostly individual buyers. She wants to increase her supply to 20 sacks of shea butter so that when she runs out of shea butter, she doesn t have to wait for the next supply or refer her customers to competitors who have more quantity. Kingdom Impact Mary intentionally prays the blessing of Jesus Christ on her customers. She also uses her profits to financially support the evangelists from her church by buying motorbike fuel for the pastors as they go out into the villages to share the Gospel. Investment Required The total investment needed to expand this business is 1,130 GHC which equates to $595 USD. This amount would cover costs for 30 calabashes of shea nuts purchased during high-price season, 10 sacks and operating cash. 1

2 Business Overview Business Description Alaafee Shea Butter is owned and operated by Mary Akonsi. Mary buys shea butter in Yendi, northern Ghana, and resells the shea butter in Kumasi, southern Ghana. Shea butter is a product extracted from the fat of the shea nut. It is extremely versatile and is used in food preparation, cosmetic products (like lotion and hair cream), and has other everyday uses. Shea nuts are only found in the northern part of Ghana, but shea butters used throughout the country. In major cities in the South, such as Kumasi and Accra, the demand for shea butter is high and the prices are significantly higher than in the North. Mary currently sells 10 sacks of shea butter every 1-2 weeks. She buys shea butter from six suppliers (shea butter producers) in Yendi market. She transports her shea butter by lorry (market truck) to Kumasi, where she sells her shea butter to mostly individual buyers. When she runs out of stock, she sometimes sends money back to Yendi with trustworthy friends to secure more shea butter from her suppliers to be brought down via lorry to save herself a trip. She wants to increase her supply to 20 sacks of shea butter so that when she runs out of shea butter, she doesn t have to wait for the next supply or refer her customers to competitors who have more quantity. Opportunities and Risks Opportunities Alaafee Shea Butter can take advantage of the high demand of shea butter in Kumasi (southern Ghana). The profit margin of shea butter is very high because Mary is able to buy it from the north and sell it in the south. Risks Mary would need to find new suppliers in Yendi in order to increase her quantity. Although the demand for shea butter is high in Kumasi, Mary needs to make sure she can get enough new customers to sell all of her increased supply of shea butter. Biography of Candidate Mary Akonsi is the mother of six children (three girls and three boys). Her husband is the headmaster of a junior high school in Yendi. All of her children go to school, ranging from nursing school to kindergarten. 2

3 Mary started her business three years ago, when she heard from people that selling shea butter in the South would be very profitable. Before the business, she used to sell koshe (a type of fried bean cake), but she was able to use some money she saved to start the shea butter business. She is not literate and did not have any education. Mary grew up in a home where both her parents are Christians. As she grew up, she also realized that Christ is her Savior and got baptized. She believes that Christ died for her sins, so her sins are forgiven and she has salvation. She currently goes to the Assemblies of God church in Yendi, where she is treasurer for the church. She was also a woman s leader in the church. She also serves by offering her cooking skills to the church whenever they have a big event that requires food. Company Structure Alaafee Shea Butter is a Sole Proprietorship owned and operated by Mary Akonsi and has no legal issues. 3

4 Marketing Industry and Market Overview Shea nut trees are only found in the northern part of Ghana, so shea butter can only be made in certain parts of the northern region. Because the shea butter is a versatile product can be used in a variety of ways, it is always in high demand year-round, both within Ghana and even internationally. In Ghana, middlemen often buy large quantities of shea butter and send them to the southern region to cities like Accra and Kumasi. Kumasi Kejetia market is the largest single market in West Africa, with over 10,000 stores and stalls. Customers The majority of Mary s customers are women who retail the shea butter in smaller quantities in their villages. She has some customers who come around once every one or two months in order to buy all her sacks in bulk. She also has some customers who buy in calabashes. Some of her customers will buy shea butter to make soap. The majority of her customers buy small quantities (1 or 2 Cedis worth of shea butter). Mary gets around customers a day. In one day, she can sell an average of 2 sacks. Competition Mary has four main competitors: Fulera, Laabi, Ayisha, and Awabu. They also buy shea butter from Yendi and sell in Kumasi. Mary and her competitors all sell in the Kejetia market but in different locations. However, Mary has a competitive advantage in her location because she is in front of a lorry (market truck) station, and people who get off the truck will notice her shea butter before her competitors. She also gets last minute customers who are about to board the lorry on their way home from the market and had forgotten to buy shea butter. Among her competitors, two has more inventory than she does: one carries 20 sacks and the other carries 15 sacks. The competitor with 20 sacks takes an average of 3 weeks to finish selling all the sacks. Sometimes, when Mary runs out of shea butter, she is forced to tell her customers to go to one of her competitors to buy, therefore losing customers in the process. Location & Distribution Mary operates her business in Kumasi s Kejetia Market, in a location near Dr. Mensah Clinic. Although the clinic is no longer there, everyone still knows the location is called Dr. Mensah Clinic (popular location). This location is in front of a lorry station where people from surrounding communities and other major cities come through to get to the market. 4

5 In the morning, Mary also walks around the market with her goods to sell before she settles into her regular market spot. This is how she gets new customers. Pricing Because shea nuts are seasonal, shea butter prices also fluctuate according to the season. May to June/July is the time when prices are low because shea nuts are harvested and plentiful in the market. Starting in July, the price steadily rises until April. March and April are the months when prices are the highest. Unit Cost in Cedis Unit Price in Cedis Profit per Unit Name of Product or Service Shea butter (calabash) - October - April Shea butter (calabash) - May - July Promotion Mary uses word of mouth promotion for her business. She knows where her regular customers stores are in Kejetia market, so she plans to visit them at their stores to inform them about her increased supply. She also has her regular customers numbers and will call them to tell them about her increased business so that they won t have to go to her competitors for extra supplies. 5

6 Financial Startup Costs Startup costs to ramp up the business include 30 calabashes of shea butter, 10 sacks to carry the shea butter, and startup operating cash of 70 Cedis. One-Time and Startup Items Cedis $ Tools and Equipment (see below) 10 $5 Equipment Installation & Prep. $0 Starting Inventory 1,050 $553 Veterianary Fees $0 Advance Rent $0 Other Fees (legal, etc.) $0 Licenses and Permits $0 Initial Advertising & Promotion $0 Operating Cash 70 $37 Total Start-up Expenses 1,130 $595 Investment Required Investment required is 1,130 GHS, which is equivalent to $595 USD. Financial Plan Assumptions Since this business depends solely on the supply of shea nuts, it is assumed that prices are normative. In the case that shea nuts are in short or heavy supply in an off-year, profit margins could change. In May and June, shea nuts are picked from trees, so that there is a dip in price and in number of customers as the supply of shea nuts flood the market. Starting in July, the price will begin to increase and will peak around October/November and will stay steady until end of April when the shea nuts are picked again. Assumptions for sales volume were made according to this pattern in the Sales tab in the financials. 6

7 Projected Income Statement Alaafee (Good Health) Shea Butter (all amounts are in Cedis) Year Income Shea butter (calabash) - October - April 13,200 13,200 13,200 Shea butter (calabash) - May - July 4,050 4,050 4,050 Gross Sales 17,250 17,250 17,250 Expenses Cost of Goods Sold 10,650 10,650 10,650 Wages Bus fare to/fro Yendi-Kumasi Market Truck Fare for Shea Butter 1,980 1,980 1,980 Storage in Market and Accommodation Ticket for Market Spot (.20 per day) Feeding Loan Payments Total Expenses 15,704 14,784 14,474 Projected Cash Flow Cash Profit 1,546 2,466 2,776 Loan Proceeds 1,130 Start-up Costs 1,060 Cash Flow (Cumulative) 1,616 4,081 6,857 Projected Income Statement Alaafee (Good Health) Shea Butter (all amounts are in $) Year Income Shea butter (calabash) - October - April $6, $6, $6, Shea butter (calabash) - May - July $2, $2, $2, Gross Sales $9, $9, $9, Expenses Cost of Goods Sold $5, $5, $5, Wages $ $ $ Bus fare to/fro Yendi-Kumasi $ $ $ Market Truck Fare for Shea Butter $1, $1, $1, Storage in Market and Accommodation $ $ $ Ticket for Market Spot (.20 per day) $26.53 $26.53 $26.53 Feeding $ $ $ Expense 6 $0.00 $0.00 $0.00 Expense 7 $0.00 $0.00 $0.00 Expense 8 $0.00 $0.00 $0.00 Expense 9 $0.00 $0.00 $0.00 Loan Payments $ $ $0.00 Total Expenses $8, $7, $7, Projected Cash Flow Cash Profit $ $1, $1, Loan Proceeds $ Start-up Costs $ Cash Flow (Cumulative) $ $2, $3,

8 Financial Investment Required Cedis $ Loan Amount (Principal) 1,130 $ One-time Service Fee Percentage 15.00% Number of Years 1.2 Months before First Payment 1 Monthly Payment Amount 90 $47.37 Total of all Payments 1,300 $ Total Service Fee Paid 170 $89.47 Terms of Loan: Loan to be paid back in 14 Monthly installments of 90 Cedis over a 1.20 Year period. One-time Service Fee Percentage: 15.0%. First payment to be due 2 months after loan inception. Action Plan Date Dec 2012 Item Buy shea nuts and start selling. 8

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