Africa Do Business Ltd (Uganda) Email: africadobusiness.com Website: www.africa-do-business.com Soya Micro-Enterprise Business Model with Soya Milk Making Machines Electric Blender Soya Bean Grinder and Separator Soya Milk Maker / SoyCow - Voltage: 220V/50Hz - Power: 1.2KW - Production Capacity: 50-100 liters a day - Feeding capacity: 100-200 persons a day - Monthly profit: at least 100 USD Price: from 200 USD - Voltage: 220V/50Hz - Power: 1.1KW - Production Capacity: 100-200 liters a day - Feeding capacity: 200-400 persons a day - Monthly profit : at least 200 USD Price: from 500 USD - Voltage: 220V/50Hz - Power: 1.1KW - Production Capacity: 200-300 liters a day - Feeding capacity: 400-600 persons a day - Monthly profit : at least 500 USD Price: from 2,500 USD August 2012
A. Soya Milk Production 1. Type of Business The soya micro-enterprise is about producing and selling soya food products at local market. The soya food products are soya milk, soya meat, soya flour and soya blends flour that are sold to low and middle income households. The micro-enterprise use small investment to produce at small scale but by making profit. The business costs are down and to keep the products produced affordable for the working poor, it is strongly recommended for production units to have the following characteristics: - No or simple refrigeration - Packing not required or very simple. The simplest packaging is none: consumers bring their own jars, buckets etc. to be filled with milk, tofu, etc. Soya flour will be packaged in plastic bags easily available on the market. - Initial maximum production volume of 150L per day. Higher production targets indicate a larger consumer market, and therefore a higher chance of sustainability. It is of course important that confidence in the ability to sell the proposed volume of production is based on previous business experience, knowledge of the market and a variety of products. The type of products produced by the micro-enterprise will of course be influenced by two key factors: availability and type of local produce (including soybeans), and local dietary habits and preferences. It is recommended that businesses produce some soymilk for two reasons: 1) profit margin for the milk and tofu is relatively high, and 2) it provides low-cost protein for the local community, which often improves their health. The ideal business model will include soymilk, tofu and soya flour. Another aspect of business model is the manner of distribution/sales: will it be retail, such as operating a restaurant or shop or wholesale distribution to retail vendors and shops, or a combination of the two? Ready to eat, or take home food could also be sold in the local market by either directly staffing a small table/kiosk or supplying existing street vendors. Wholesale in not advised at this level because it has to be done by providing products with a longer shelf-life of at least three days (e.g., tofu, bottled soymilk,) to various retail operations such as restaurants or shops. 2. Soy Processing Systems Soya Milk and Soya meat makers An electric Grinder/blender has a daily production capacity of 50 litres of soya milk and 10 kg of tofu. Its cost and accessories is from USD 100. Small scale soya processing system using the electric Soya Milk Maker has a daily production capacity of 200 litres of soya milk and 50 kg of tofu. Its cost and accessories is from USD 3,000. Soya four and soya blends flour 2
Small scale unit for making soya flour and soya bended flour with a soya grains roster and mixer. The cost of a grinding mill is from USD 1,000 but they are available for grinding services in many places that is it is possible to bring the grains to the mill and pay grinding service fee. 3. Financial Projections: Cost / Revenue and Profit Calculation It is important for a business to quantify and project the flows of revenues (money in) and expenses (money out) that it will experience in the short and medium term. This is a necessary exercise at all times, but it is critical in the planning and start-up stages of a business since the improper planning for, and management of, cash flows is the single largest cause of business failure. The Cost-benefit Analysis provides a very useful snapshot of whether the business will be profitable or not. Calculations about cost-benefit analysis are included as Appendix. N.B.: The costs are given in US Dollars and can be converted in any local currency and these costs could be adjusted as well considering the prevailing prices of different items. The cost-benefit analysis table has 4 sections: A. Capital Investment: This includes the cost of all equipment, site preparation, etc that is necessary to start the business. B. Variable Costs: These are costs that are only incurred if there is production. C. Fixed Costs: These costs are incurred regardless of whether there is production or not. D. Revenue: This is the money that the business collects for products it sells. Here are the basic assumptions: 1- The start-up investment for the Electric blenders is about USD 350 and Soya Milk Maker System is approx. $5,000 2- It is assumed that 1kg of dry soybeans yields 8 liters of soymilk, and approx. 1.2 kg of 80% moisture okara. A typical soymilk batch uses 2 kg of dry soybeans (that are soaked 8-10 hours and absorb 1.4 kg of water per 1 kg of dry weight) to 15 liters of water. This results in approx. 16 liters of soymilk. Production is assumed to be 50 liters per day per electric blender and 30liters/hour for a Soya Milk Maker System. 3-1 liter of soymilk will produce 0.3 kg of tofu. 4- Production is assumed to be comprised of 8 hours/day (130 liters soymilk) divided into 80% soya milk and 20% tofu. These figures are arbitrary and can be modified. 5- The selling prices for the soy dairy foods were determined in light of similar cow s milk products, and the cost of production. For the Soya Milk Maker system, labour is assumed to be comprised of 3 people. B. Experience Individuals or groups with prior experience in some kind of profit-making business are superior. Likewise, partner NGOs with experience in assisting or monitoring micro-enterprise projects will also be vastly more helpful than those without such experience. 3
C. Management / Training At least one person managing or co-managing must have basic reading and writing skills, preferably in English. The ideal situation would have a core of two people. These two people between them would experience as a cook, mechanical aptitude (handy-man type and basic management skills or potential. Other, less critical and unskilled employees could be hired depending on volume of production or the number and variety of additional products produced. The manager (ideally the entrepreneur or partner), should be able to communicate well and be hard working and self-motivated. He or she must also be able to motivate and manage the work of other people, and so must have a combination of friendly attitude with discipline both for themselves and for employees. If the manager has no basic accounting or money handling skills, then this will require the help of a partner or family member who has the experience. The people selling the product, or dealing with the public in any way, should be polite and friendly at least. It is better if they are also well-informed about the products from a nutrition and health basis. Training is important: most critical is the training of the primary operator and/or entrepreneur who may be the same person. Procedures for quality and safety must be understood and followed, as per the details in the technical and operation documentation provided. Improper operation of the equipment can be dangerous, or damage the equipment, or produce an inferior product. Furthermore, improper formulation of value-added products, or locally adapted recipes, will result in poor acceptance and sales of the finished product. The main causes for Soya Milk Maker locations that have failed are due to poor management and organization of the business, so training that addresses these activities is also needed. Subjects of training include: a) Operation of the Soya Milk Maker b) Production / formulation of value-added products. c) Cleanliness / Sanitation d) Sales / Distribution and Packaging e) General management including personnel management, accounting, and marketing f) Nutritional and home cooking information for customers D. Marketing and Pricing The business should try to estimate the size of each of the target markets. It s also good to try and quantify the purchasing power of each group, and key characteristics (age, if they prefer packaged vs. fresh, etc) so that they can be properly understood and targeted. A critical factor is the prices that will be charged for the different products. First of all, this has to take into account the actual production & packaging costs plus a minimum profit. However, no matter what such a formula indicates as a suggested price, the prices for competitive products must be examined to make sure that the new products are affordable and less expensive than similar existing products. A large number of prospective customers may be illiterate. Even if not, people of modest education need the information and selling approach that they can appreciate. For example, more pictures and opportunities to sample the food product are helpful. 4
There are three main areas of marketing attention: price, quality and health. Only careful analysis of the community and potential customer base will allow a decision on the relative importance of each of these three aspects. Soymilk products made with the system, can be low price, high quality and definitely healthy. So there is no shortage of good marketing messages to benefit the business. 5
APPENDIX: Profit model Cost-Benefit Analysis 1. Business Model for Two Electric Grinders (Daily capacity: 100 liters of milk, 10 kg of Tofu) Unit Cost in USD Quantity Total Cost A) Capital Investment Two Electric Grinders and 100 2 200 accessories Tables, containers, sink, utensils 50 Start-up inventory (100 kg of soya 100 beans and ingredients) Initial Start-up Investment= 350 B) Variable Costs 1- Soybeans (per kg) 1 0.75 16kg x20 days=300kg 240 2- Labour - avg. per day 0.5 1 USDx20x 2 pers 20 3- Electricity 0,2 per Kwh 100 20 4- Charcoal 10 2 bags 20 5- Water (per m3) 2 0,25x20 20 6- Ingredients (sugar, salt, flavor) 20 (per kg) 7- Coagulant (for tofu) (per 20g) 20 360 C) Fixed Costs (per month) 2 1- Rent (6 m2) 20 2- Maintenance and spare parts 10 3- Depreciation on Equipment (1 10 year life) 4- Promotion 5 5- Distribution 5 6- Cleaning chemicals 5 55 Monthly Production Costs 415 D) Revenue 4 Soymilk / liter (cow's milk is $0.30-0.30 100litres x 20 days=2,000 liters 600 $0.90 / liter) Tofu / kg (regular cheese is $10-1.50 10 kg X 20 days= 200 kg 300 15/kg) Total revenue 900 Monthly Profit 485 N.B.: - One kilo of soya bean grains give 8 liters of soya milk - One kilo of soya bean grains gives 3 kg of tofu - 16 kg of soya bean grains gives 100 liters of soya milk and 10kg of tofu 6
2. Business Model for One Soya Milk Maker (Daily capacity: 200 liters of milk, 20 kg of Tofu) Unit Cost in USD Quantity Total Cost A) Capital Investment One Soya Milk Maker and 3,500 1 3,500 accessories Tables, containers, sink, utensils, etc 1,000 Start-up inventory (500 kg of soya 500 beans and ingredients) Initial Start-up Investment= 5,000 B) Variable Costs 1- Soybeans (per kg) 1 0.75 32kg x20 days=300kg 480 2- Labour - avg. per day 3 1 USDx20x 3 pers 60 3- Electricity 0,2 per Kwh 100 20 4- Charcoal 10 4 bags 40 5- Water (per m3) 2 0,25x20 20 6- Ingredients (sugar, salt, flavor) 40 (per kg) 7- Coagulant (for tofu) (per 20g) 40 700 C) Fixed Costs (per month) 2 1- Rent (6 m2) 50 2- Maintenance and spare parts 50 3- Depreciation on Equipment (3 200 year life) 4- Promotion 25 5- Distribution 25 6- Cleaning chemicals 20 370 Monthly Production Costs 1070 D) Revenue 4 Soymilk / liter (cow's milk is $0.30-0.30 200 litres x 20 days=4,000 liters 1,200 $0.90 / liter) Tofu / kg (regular cheese is $10-1.50 20 kg X 20 days= 400 kg 600 15/kg) Total revenue 1,800 Monthly Profit 730 N.B.: - One kilo of soya bean grains give 8 liters of soya milk - One kilo of soya bean grains gives 3 kg of tofu - 32 kg of soya bean grains gives 200 liters of soya milk and 20kg of tofu 7