Cynthia John, Hairdressing Shop. Executive Summary. October Business Description. Kingdom Impact. Investment Required. Name: Cynthia John

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1 Cynthia John, Hairdressing Shop October 2011 Name: Cynthia John Location: DC Kura village, northern Ghana Business Name and Location: Ponba Hairdressing Shop, DC Kura Executive Summary Business Description Cynthia is the owner of Ponba Hairdressing Shop. Ponba which means try or struggle, and was named after the parable of the talents. In the parable, the man who buried his money and did not try to earn more was rebuked by the Lord whereas the one who tried to generate a good return for his Master was rewarded. Cynthia provides the DC Kura community with hairdressing and shampoo services. She operates out of her home and washes hair outside, next to her house. Everyone in her community knows that she styles and shampoos hair and her current location is fine; however, it is a good distance from the road and hidden from people passing by the community. Cynthia is trying to grow her business by capitalizing on the demand in her community and several others. At a recent funeral, Cynthia was asked if she had any extra containers of soap to sell. This also happened at six other funerals, so Cynthia began taking her products with her to funerals and selling them. Cynthia would like to receive a loan so that she can also sell her products on wholesale at funerals and during market, which is held twice weekly in different communities. She would also like to build a thatch-roof shop next to the roadway so that she will get more drive-by traffic and gain better visibility. Kingdom Impact Cynthia s shop is located in DC Kura, a community comprised mainly of Muslims. Before starting her day, she will pray and she will often ask her customers if she can pray for them too. Cynthia also invites her customers to church. Investment Required The total investment needed for this business is 395 Cedis, or $263 USD. This amount would purchase additional hairstyling products and material to build a thatch-roof shop next to road.

2 Business Overview Business Description Products and Services Ponba Hairdressing Shop is the local hairdressing shop in DC Kura, a community of 900 people. Women in the community come to Ponba to have their hair shampooed and styled. Cynthia, the owner of Ponba, also travels to other villages and to local markets to sell her products to other hairdressers on wholesale. While Cynthia s service is a discretionary service, she shampoos and styles the hair of the women in her community twice a week in low season and much more during high season. Her repeat customer base can be attributed to her understanding of how each type of hair responds to the products that she is using in her customers hair. Many hairdressers use the same type of soap and product in each woman s hair; however, a woman s hair will respond differently to each type of product and the use of the wrong product will dry out a woman s hair. Understanding this, Cynthia carries four different types of product: UB, Bo16, Garo and Soft Hair. By getting to know each woman s hair, Cynthia can use the product that is best for each customer and create a repeat customer. In addition to servicing the local community, there is a market for wholesale products to be purchased by other women and hairdressers in other villages. During funeral season, the demand for soaps that Cynthia carries often is greater than the supply that she has on hand. Many women have approached Cynthia during funeral season asking to purchase additional containers that she has. In the past, she has been unable to meet this demand. After experiencing this response she began traveling to other communities and meeting other women to sell her products on wholesale. She also began selling her products at the local markets. Any product that she sells on wholesale she is unable to use at Ponba Hairdressing Shop which forces her to go to the market more to buy products for her shop. If Cynthia were to receive a loan, she could purchase her supplies in bulk which would allow her to spend more time selling and servicing her customers and require less time traveling to go get supplies. Ponba Hairdressing Shop is tucked away in her community, far from the main road. This only allows for people who know Cynthia to come to her store. Because of this, Cynthia would like to build a small shop at the front of the village alongside the road. This is the main road between the towns of Yendi and Tamale. The capital outlay for the shop would be minimal with costs consisting of food for the individuals constructing the mud walls and 30 Cedis for 15 pieces of thatch for the roof. The value add of having a shop next to the road would be tremendous as it would increase visibility and give her customers a place to congregate. Currently, she is washing hair next to her house. Risks and Opportunities Risks

3 The most significant risk is that the sales projections and cost assumptions for new products prove to be inaccurate. With little experience in selling her product at the market on wholesale, it is possible that future sales could fall short of expectations. Fortunately, her products are not perishable and if she were unable to sell them on wholesale, Cynthia could use them in her shop on her customers. If she did overestimate the demand for wholesale products it would be difficult to make loan payments. Another risk is that her competitors could charge a lower price to win her customer s business. Opportunities There are many opportunities in this business. Success selling product wholesale could be replicated at many other markets. Not only would this create additional customers and profits but it would also be a form of advertising for Cynthia s shop. If Cynthia moved her shop nearer to the road from its current location she would generate more customers and she could also sell her product on wholesale to women that may be traveling to Yendi or Tamale to purchase those same supplies. Biography of Candidate Cynthia John is married and has one boy. She became a Christian when she was a child. After witnessing people in her village provide sacrifices to the idol worshippers, she found that those people had to come back again and again with a sacrifice. The Christians in the village did not do this. When she heard the message of Christ and learned that He went to the cross and died as a sacrifice for our sins, she believed that this was love. Christ died for our sins and he did not require a sacrifice from us. He went freely. Cynthia stated that this was true love, a complete sacrifice once and for all requiring nothing in advance. Company Structure Cynthia operates Ponba Hairdressing Shop outside of her home. She keeps her supplies in her home that she shares with John. If Cynthia were to receive a loan, she would move the location of her shop nearer to the road. Cynthia would be the soul owner of that shop.

4 Marketing Industry and Market Overview Hairdressing in Ghana is quite different from Western hairdressing. Because of the texture of black people s hair, people do not wash their hair on their own on Ghana. They also change styles consistently by getting weaves, wigs, extensions, and other additions to their hair. Women are willing to spend quite a lot of disposable income on their hair every week because it is a symbol of beauty and wealth. Cynthia lives in the community of DC Kura. There are estimated to be 400 women in DC Kura. Located nearby are the villages of Sambu and Perya. Cynthia will visit these villages on occasion to serve large groups of women at the same time. In addition to her local community, Cynthia will travel to the market to sell her products. At market, Cynthia can generate a substantial amount of business. At times she has sold four times the amount of product that she normally sells. Customers Cynthia s customers are all women and she services them outside her home. Because her home is located so far away from the road, the only customers that she has are those that know her. Her customers are loyal to her as she makes a habit of learning about each customer s hair and which product is best for that woman s hair. Her customers are sensitive to price; however, they are responsive to Cynthia when she explains to them the reason for any price increase she must pass along to them. If a woman has not come for a little while, Cynthia will proactively go to the woman s home and ask her to come back to the shop. When selling wholesale, her customers are women in other communities that are buying products for their own hairdressing business. Sales increase dramatically during wedding and funeral season. Everyone wants their hair to look nice for these special occasions. Competition There are other women in her community that shampoo and style women s hair. Cynthia is the only woman in her community that has a large selection of products for her customers to choose from. This helps her to meet the needs of the women in her community. Pricing and Distribution Women will come to Ponba Hairdressing Shop to get their hair washed. Cynthia charges 1 GHS for a woman to get her hair washed with shampoo, conditioner, and styling lotion. Women often come twice a week for this service. In addition to the wash they also can choose from several leave-in relaxers that will style their hair. These are UB, Bo 16, Garo, and Soft Hair. UB costs the customer 4 GHS, Bo 16 costs 3 GHS, and both Garo and Soft Hair cost 3.5 GHS.

5 When selling her products by the container on wholesale. Cynthia charges her customers 1 GHS more than what she pays for the product. Unit Price Name of Product or Service in cedis UB Relaxer Soft Hair BO Garo Washing 4.00 Setting Lotion 4.00 Conditioner 4.00 Weave Cap (10/box) UB Relaxer Wholesale 8.00 Soft Hair Wholesale 7.00 BO16 Wholesale 7.00 Garo Wholesale 7.00 Shampoo Wholesale Conditioner wholesale Setting Lotion Wholesale Promotion Cynthia promotes her business in three ways. First, she works on a referral basis out of her shop in her community. She believes that because she understands how a woman s hair responds to different products that it wins her business within the community. Secondly, when she hasn t seen a customer for a while she will go to their home and inquire of her absence. Lastly, Cynthia plans on selling her product on wholesale at market and during funeral season to other hairdressers.

6 Financial Startup Costs Startup cost to expand the business would allow Cynthia to purchase an additional box of each relaxer: UB, Bo16, Soft Hair, Garo, an additional gallon of shampoo, conditioner and setting lotion, and one box of cap weaves. Also, she would use 30 GHS of the loan to build a thatchroof shop next to road to make her business more visible. She would implement the help of friends in her community to build and raise a mud wall. This would take approximately one week before it was dry and she was able to place the pieces of thatch on top. Unit Price in Cedis Number of Units Cedis $ Tools and Equipment Shop $20.00 UB relaxer $56.00 Soft Hair $48.00 BO $48.00 Garo $48.00 Shampoo (gallons) $3.33 Setting Lotion (gallons) $3.33 Conditioner (gallons) $3.33 Weave Cap $33.33 Total Tools and Equipment 395 $ Investment Required Investment required is 395 GHS, which is equivalent to $263 USD. Financial Plan Assumptions High Season will last from December to May Customers in high season are 180 per month and low season equals 60 per month Assumes six day work week unless farming season Sales and cost numbers were provided by business owner Expectations for selling her products on wholesale at market are high and are the main driver of loan payback Selling product on wholesale is driven by volume as margins are low

7 Projected Income Statement Cynthia (all amounts are in $) Year Income UB Relaxer $2, $2, $2, Soft Hair $2, $2, $2, BO16 $2, $2, $2, Garo $2, $2, $2, Washing $5, $5, $5, Setting Lotion $5, $5, $5, Conditioner $5, $5, $5, Weave Cap (10/box) $ $ $ Others $5, $5, $5, Gross Sales $31, $31, $31, Expenses Cost of Goods Sold $28, $28, $28, Wages $8.00 $8.00 $8.00 Spray (3) $96.00 $96.00 $96.00 Comb (6) $2.00 $2.00 $2.00 Pins (packets) $1.33 $1.33 $1.33 Rollers (packet) $10.00 $10.00 $10.00 Setting Lotion (gallon) $ $ $ Conditioner (gallon) $ $ $ Hand Gloves (5CD/box) $56.67 $56.67 $56.67 Soap $16.00 $16.00 $16.00 Transportation (in and out) $64.00 $64.00 $64.00 Loan Payments $ $24.00 $0.00 Total Expenses $29, $29, $29, Projected Cash Flow Cash Profit $1, $1, $1, Loan Proceeds $ Start-up Costs $ Cash Flow (Cumulative) $1, $3, $4, Financial Investment Required Cedis $ Loan Amount (Principal) 395 $ One-time Service Fee Percentage 15.00% Number of Years 1 Months before First Payment 1 Monthly Payment Amount 38 $25.33 Total of all Payments 454 $ Total Service Fee Paid 59 $39.33 Loan to be paid back in 12 monthly installments of 38 GHS, or $25.33 USD, over a 12 month period. First payment to be due at the end of the 2 nd month.

8 Action Plan Upon receipt of the loan the following steps should be taken quickly: Cynthia would travel by car or bus to Yendi to purchase her materials. Thatch used for the roof can be purchased from people walking through DC Kura that are carrying it on their head. It would take a few days to build and erect the mud walls for her shop. Once the walls have been constructed Cynthia must wait one week before placing the thatch roof on top. Each of these actions could be completed immediately.