Business Idea Revival Grammar, Uganda Stage 1 New Business Track 1
School name Country Business Name Business Activity Section A: our Details Revival Grammar Matugga, Uganda Revival Delicious Bakery Primary: Bakery; Secondary: Crafts Section B: our School 1. Tell us about your school. For example, how many pupils? What age are they? Location? Environment? Ivan Lugoloobi and his wife, Allen Lugoloobi, established the Revival Grammar Centre in February 2001. With humble beginnings the Centre commenced with a small primary classroom of 30 children. Ivan and Allen have worked tirelessly for the last 13 years to develop the Centre which now provides a nursery school for 50 pupils, a primary school for 450 pupils, a secondary school for 280 pupils, an orphanage for 130 needy and orphaned children, a clinic serving the children and the community church which supports a number of satellite churches across the country. In July 2009 a farm was established to help reduce food costs, improve the children s diet, teach skills and generate income. Entrance to Revival Grammar Revival Grammar School The Revival Grammar Centre is located in the small trading town of Matugga, which is 12 miles north from the City of Kampala. Matugga has a population of around 15,000 people with a large number of kids under 10 years old. Many of the families in Matugga have between 4 to 7 children per family and live in a house with 1-2 rooms. The main trading industry is agriculture, specifically cattle and fruit, with most families surviving on less than 5,000 shillings per day ($2 USD). Trading Shops in Matugga Entrance to Revival Grammar Section C: our Resources 2. What resources at your school could you use to start a business? (2) 2
a. The school has two farms with crops such as bananas and maize, and live stock such as cows, chickens and goats. We may use this land to breed and sell rabbits, chicken or other types of animals that breed relatively quickly. The farms can also be used to grow and sell fresh produce such as maize, corn, and mushrooms to the students, parents, teachers and the community of Matugga. The farm is located 6km from the school and is difficult for the students to get there as no buses go directly to the farm. b. At this stage the school does not have a recycling system and all the rubbish is burnt throughout the week. We can use this rubbish, especially the plastics, to be recycled and sold. For example once plastic biros run out of ink they are thrown into the rubbish. The school goes through 50-100 pens a week and these pens can be reused if the ink is refilled. These can be sold to students, the community of Matugga and other schools within the region. 3. How could you use your school s location as a business opportunity? (2) a. The school is closely located to the large food markets in Mabbanda (1 mile from Matugga), which has a lot of foot traffic. The school enterprise will be able to establish a stall at the market to sell the products or be able to market the business during the week. b. There are opportunities for the business to offer labour at a low cost to the local village that is still higher than the minimum wage in Matugga. Matugga is largely population with young families on one income (less than $2 USD per day) and the unemployment rate is high, between 20-30% for adults and 70-80% for young adults up till the age of 25. This will be a win-win scenario because as students we are unable to attend the business during the day and we are able to offer employment to our community. c. The school is located off the main road in Matugga with the village shops and stalls being central to the school. Bombo road is the single road that leads directly to Sudan and there is high traffic flow. As a result the school has a prime location for a stall to be established for the community of Matugga and for passing traffic. 4. How could you use your existing skills to start a business? (2) a. The girls within the group have existing skills in craft making, including mats and jewellery and could make and sell products. b. The boys have agricultural skills and could use these to raise livestock for the school, including rabbits, cows, goats, chicken and ducks. c. Both boys and girls have skills in cooking, and enjoy making cookies and bread. They could make these products and sell them to the local community. Revival Team Brainstorming Meeting Section D: Brainstorming 5. What business ideas did you think of when brainstorming? (5) 3
1. Operate a bakery that sells fresh bread and other food products (i.e. cookies, fruit); 2. Make mats, baskets and bangles and sell them at a stall; 3. Breed rabbits for schools to purchase to use in biology practical exams; 4. Mushroom growing and selling; 5. Recycle plastics, paper, food scraps into useful products to sell. Section E: our Business Idea 6. Which of your ideas did you choose as your Final Business Idea and why? (4). The business we chose to set up is a bakery stall in the local community that sells bread, buns and sweet baking. The stall will be diversified to include woven crafts including mats and jewellery, and recycled products. The business will support orphan children within Matugga and the surrounding areas and in additional will promote awareness for child abuse. As the school runs an orphanage program the profits will go to supporting additional orphans to attend the school as boarders. Reason 1: The students enjoy the task of cooking and baking, and are interested in this as a business idea. In addition the stall will be able to stock other products that the business create, such as crafts and recycled products. Reason 2: There are currently no small fresh baking stalls that specialise in selling bread in Matugga with all bread being brought in. Most of the bread sold is between 2-3 days old, which means that the current baked options are often not at their best. Reason 3: Baking savoury products is an easy and relatively low cost exercise. If there is old stock the business s profits won t be fully eroded and the left over product can be donated to the church for the local community, sold at a discount, or given as chicken feed to the school s farm. 7. How does your Final Business idea meet the People, Profit, Planet criteria? (6). People: This idea meets the criteria for People as the business will support orphans who form part of the Revival school through paying for their school boarding fees (380,000 shillings per term) and will promote awareness of child abuse at the stall. This will be done using flyers and posters at the stall. In addition to this, the business both creates employment for the community as well as provides for the needy through left over stocks donated to the church to distribute. Profit: We believe that this idea has potential for high return on investment through the low costs of raw materials, overheads (no rent required) and wages. Considering most families in the community have a demand for this product, and there are relatively few competitors, the profit should be realised relatively quickly. Planet: The coal used to cook the products will be recycled into fertiliser for the school to use at their farm and for plants around the school. In addition all the waste collected from cooking the products will 4
be collected and given to the school s chickens for feed. Considering the school does not have an existing recycling system the group will allocate a portion of their profits to a recycling system for the school. This will mainly include separate bins for general waste, plastics, bottles and paper. Once the recycling system has been established then the plastic products may be melted down and used for the girls jewelleries that will be sold at the store. Section F: Start-up capital 8. a) Does your business need start up capital (money)? Please circle one: es /No (1) b) If yes, how are you planning to raise the start-up capital? (10) As part of the feasibility questionnaire we calculated the start-up capital required to commence trading the business. The table below outlines the Sources and Uses of funds to commence trading the Revival Delicious Bakery: Source of Funds Use of Funds Item Total UGX Item Quantity Price UGX Total UGX Fundraiser: Fixed Assets: - Church Performance 50,000 Charcoal Oven 1 250,000 250,000 - School Assembly 140,000 Charcoal Bag 1 65,000 65,000 - Community Walk 87,500 Mixing Bowls 2 5,000 10,000 - Parents 56,000 Loaf Tin 4 5,000 20,000 Sub Total 333,500 Mixing Spoons 2 3,000 6,000 Apron and gloves 2 10,000 20,000 Convertible Note - Bullet 150,000 Basket for bread 1 10,000 10,000 Sub Total 381,000 School Loan - Term Loan 80,000 Raw Materials: Share Issue - Voting Rights 50,000 Flower - carton 1 55,000 55,000 Baking Powder 1kg 1 10,000 10,000 Cooking Oil 5 litres 1 30,000 30,000 Milk 1 litres 2 2,600 5,200 iest 500g 1 7,000 7,000 Plastic Bags 100pack 1 2,000 2,000 Branding stickers 100 1 15,000 15,000 Sub Total 124,200 Total Source of Funds - UGX 613,500 Total Use of Funds - UGX 505,200 Total Source of Funds - USD 245.40 Total Use of Funds - USD 202.08 Surplus Cash 108,300 Surplus Cash % Total Assets 21.4% We have decided that it is best to diversify the capital raising risk across a number of funding options and to allow a buffer of around 20% of the total assets for a contingency allowance. 1) Fundraiser: a) Church Performance We have spoken to Ps Ivan to confirm that the students in the group are able to put together a tribal dance and performance (as per the Resource Assessment) for the Church across the 5
three services on a Sunday. Ps Ivan believes that the business is representing a good cause by supporting orphans and increasing the awareness of child abuse. The model assumes that 25% of the Church congregation gives 1,000 shillings towards the business. b) School Assembly We have spoken to Madam Allen to confirm that the students may perform the same tribal dance at assembly for the senior school. In addition to the performance there will be a raffle for students with the prizes ranging from sweets, fruits and other items donated from parents and teachers. Madam Allen has agreed that the student who raises the highest amount of money for the business will receive a one-term tuition paid by the school equating to 380,000 shillings (>50,000 shillings donations to qualify). c) Community Walk We will break up into 10 groups of 5 students and walk around the community of Matugga to promote the business and request donations to commence trading. We will put together flyers with information on the business, what will be sold, where the profits are going and what the business represents. The model assumes that 250 people will give 350 shillings each. d) Parents During the term holidays each student will go home with a flyer to give to their parents that will talk about the business and request a donation to commence trading. The model assumes that 20% of the students parents will give 1,000 shillings towards the business. Once the fundraising is complete we will have a better idea of the funds required from the other financing options. The additional financing options available are as follows: 2) Convertible Note The school finance team have agreed to lend 150,000 shillings via a convertible note to the business. The convertible note will pay interest of 6% p.a. and will have an Option at the start of November to either be called back or converted to voting shares at a discounted rate of 4,500 shillings per share (normally 5,000 shillings per share). The school finance team had a concern that the funds will not be repaid so we approached the school with the idea that if the funds are not repaid within 3 months then the school will have the option to convert the note into shares at the discounted rate. 3) School Loan In addition to the convertible note the school finance team have agreed to lend the business 80,000 shillings. The term loan will pay interest of 10% p.a. and will have repayments of 20,000 shillings per month for four months. The school noted that the interest rate is higher than the convertible note as the loan is unsecured and there is no option to convert debt to equity shares. 4) Share Issue The share issue is only for the directors of the business (students and two teachers) with 10 shares issued at 5,000 shillings per share. The shares are classified as normal voting shares to ensure ownership control with the directors. If the convertible note is fully converted in November then the 10 shares will be diluted though the ownership is with the school and all the students have agreed on this. Each share will receive a quarterly dividend to the discretion of the directors. There will not be a liquid market for the shares to be traded as the shares must be invested for minimum one year and then the shareholder has the option to cash in their shares or reinvest for another year. 6
Appendix (OPTIONAL Bonus Points) ou can use this space to paste or attach any items which support your business idea, e.g. a completed Resource Assessment, Feasibility Study, reports or photos. (5 Bonus Points) RESOURCE ASSESSMENT TEMPLATE Does your school have any natural es No If yes, give details resources? Water Borehole for ground water Land or farmland School Farm, empty block space only, not land Anything else e.g. beach, palm-trees, No orchard Does your school have any physical es No If yes, give details resources? Rubbish that can be recycled Plastic, glass, pens, food scraps. Machinery or equipment e.g. a paper recycling machine Carpentry Equipment, Sewing machines and tailoring, Hairdressing Equipment, Buildings e.g. school hall School Hall, Church, classrooms Electricity or a generator Solar and Wired Electricity Internet N Computers 10 Computers Printer Administration only Anything else e.g. sewing machine, Library resources motorbike Is the location of your school. es No If yes, give details Near a big town or city Off the main road in Matugga, which is a town with a population of circa 15,000 people. Matugga is 12 miles from the capital city of Uganda, Kampala, though it takes over an hour to drive due to traffic congestion. Near a Tourist Attraction e.g. Safari N Park Near industry e.g. a textile mill N In an area with fertile land N Agriculture is the largest industry within the town of Matugga, though the farms are mostly outside of Matugga in the surrounding towns. Most of the land in Matugga is clay and is not fertile ground. 7
Anything else e.g. near a market There is a large market in the following town from Matugga, Mabanda. Many people from Matugga and surrounding villages buy all their fresh produce from these markets. Are there students in your Team es No If yes, give details with..? Arts, Crafts or Tailoring Skills Designing Graphics, Making woven mats, ropes, baskets, Computer, Internet or Media skills Computer Skills, Video Camera Farming or Cooking skills Rabbit farming, Vegetable farming, Cattle farming, goat farming, chicken farming, ducks, pigs. Many enjoy cooking and baking, including cookies, sweet buns, bread and other small snacks. Maths and accounting skills School mathematics Sports skills Netball, Football, Volleyball, Running, Music or Dance skills Dance, Piano, Singing, Guitar, African Drums Language or Teaching skills Luganda, English, Swahili, Lusoka, Tribal Languages, Tutoring English Anything else Firewood, Boxing, Preaching SOCIAL JUSTICE / COMMUNIT INVOLVEMENT What causes are evident in your community? Orphans Child Abuse Sanitation Nutrition Gambling Unemployment and Education Drunkenness Description: High Importance, including counseling and guidance. High Importance! Many of the children in Matugga have gone through a form of child abuse, whether physical or physiological. Access to clean water is limited. Many of the families in Matugga receive between 1-2 meals a day if finances permit. Access to nutritious food is available though it is still dependent on money, Most families eat portshaw and beans with limited access to meat. Growing problem in Uganda. Unemployment rate is high, between 20-30% for adults and 70-80% for young adults up till the age of 25 Due to money most people are unable to afford alcohol though this is access to cheaper forms. This is a growing problem in Matugga, especially with the unemployment rate. 8
FEASIBILIT ASSESSMENT BAKER SHOP If you are going to sell a product: es No If no, how can you overcome it? 1. Would most consumers consider the product attractive or useful? Most families in Matugga and Uganda eat bread for either lunch or dinner. It is generally not an expensive product and feeds many members of the family. As there are no bakeries in Matugga and the supermarkets sell bread that are 2-3 days old we believe bakery products will sell successfully in Matugga. 2. Is the product easy to store and transport? The raw material and finished products can be stored at the school. There will be limited transport required, though taxis are available on the main road if we are required to travel. 3. Does the product have a long lifespan (i.e. it won t go off, wear out or go out of fashion)? N Bread and food products generally have a shelf life of 3-5 days (depending on the product), Expand sales to include other retailers, to increase the amount used, and decrease the risk of not selling. Giving away bread that is a little past its best to those who need it most, or to the church to give away. Discounting the product before we need to give it away. 4. Is the product safe for customers to use or consume? Providing it is cooked and stored correctly. This can be managed accordingly to ensure the food remains safe to consume. 5. Is the product easy to make? Most of the products are easy to make and 6. Do you have access to the necessary materials? 7. Will the product be in demand all year round? 8. Is the product easily packaged and transportable? 9. Will you be able to sell this product at a price that will cover the costs of making it and still generate a profit? will only take between 30-60 min to prepare. Oven, flour, charcoal, milk, sugar etc. There are only two seasons in Uganda, wet and dry. During both seasons the products will be in demand. The products and light and are easy to transport. Plastic bags will be purchased to package the finished products. Due to economies of scale the raw materials will be purchased in bulk and therefore reducing the cost to produce the goods. We expect that the bread and cookies should sell for 50% more of the cost to produce the products. Bread sells for around 3,000 UGX and it is estimated the cost around 1,000-1,500 to produce. 9
10. Does this product have a low start-up cost? N Charcoal 10,000; raw material 30,000; wooden stall 80,000. How to get start up capital Perhaps get a loan? Fundraising, using the singers from the group to raise money at events or church. Selling bread at visitation days and raising money that way. Running competitions, MDD invite schools to attend and the money collected from the proceeds. Organising a soccer match, with an entry fee per player. 11. Does making/selling the product have educational value for the students? The students will learn how to cook large quantities of products and manage them to ensure the best quality products are sold 12. Overall - does this seem like a good business idea? always. Overall the business idea appears good providing we can manage the shelf life of the products to minimize waste and to ensure the best products are sold. There are no bakeries in Matugga and most of the bread sold at the supermarket is 2-3 days old, which has gone stale. Many families eat bread for dinner and it s a product in demand and therefore we believe that a bakery selling a range of products will be very successful. FEASIBILIT ASSESSMENT - RECCLING If you are going to sell a product: es No If no, how can you overcome it? 1. Would most consumers consider the product attractive or useful? 2. Is the product easy to store and transport? 3. Does the product have a long lifespan (i.e. it won t go off, wear out or go out of fashion)? 4. Is the product safe for customers to use or consume? 5. Is the product easy to make? N Can get training on how to make the pens, fill them quickly and recycle them. Perhaps visit a pen manufacturing plant in Uganda, to see what the refilling process would look like. 6. Do you have access to the necessary materials? N Raise start up capital, after we know what recycling means and what is involved in the process eg, what will be recycled, are their types of pens that cant be recycled. 10
7. Will the product be in demand all year round? 8. Is the product easily packaged and transportable? 9. Will you be able to sell this product at a price that will cover the costs of making it and still generate a profit? 10. Does this product have a low start-up cost? 11. Does making/selling the product have educational value for the students? 12. Overall - does this seem like a good business idea? N In demand at the start and lead up to the new terms. Not in demand every week. Not having a set stall would help limit the inflexible costs of the business. Or diversifying to recycle other products to sell. 11