Soap Project - Development

Lay out of the budget plan and getting started

Last comment added: Mon, 14 Jan 2008 16:53:59 PST

Comment 1 on Soap Project - Development

REQUIREMENTS AND COST (Ushs) FORMAKING LIQUID SOAP

Below are the requirements to be in place before getting to the chemical and later liquid soap.

1. Universal-wide range PH indicator of 1-14 or 2-10.5 =6500 (Ph paper:Litmus Paper)

Mingling(mixing) stick = 2500
Weighing scale...........=7500
Gas Mask...................=6000
Containers(3)..............=18000
Water tank(1).............=15000

Total...............................= 55,500 Ushs

Chemicals and the Cost for making 400litre

sulphonic Acid................20 kg*1kg =5000 =100,000 Ushs
Caustic soda...................2-2.6kgs

(sodium Hydroxide) 5kgs=40,000 Ushs @8000
Tibro /Ungerol/Slies.........20kgs @5500=110,000 Ushs
Urea...............................4kgs @1500=6000 Ushs
Sodium Metasilicate.........4kgs @8000=32000 Ushs
colour (Apple Green).........1kgs @28000 Ushs
Perfume (Lemon,Lavender).1 kg @32000 Ushs
Water...............................400 litre @ 100=2000 Ushs
Salt...................................5kgs@250=1250 Ushs

Total.................................................... 251250

Other costs

Labels....(40 stickers on the containers)......................................32000 Ushs

Packing 5,10 and 20 litre jerican plus (recycled water bottles),........20000 Ushs

Marketing.................................................................................20000 Ushs

Transport cost...........................................................................50000 Ushs

Total.............................................................................. =122,000Ushs

Grand total..................................................................428,750 Ushs only

This is the amount required to make 400litres of liquid soap and sales possibly.

5 litres sells for 7500 Ushs.

Waiting for all comments and advice towards the soap development in Gulu

Comment 2 on Soap Project - Development

To make 400 litre after getting started ,the cost of the other materials wont be required especiall one which are fixed like the containers but the exact amount for the the chemicals which will produce liquid soap is 251250

Comment 3 on Soap Project - Development

What are the labor costs? Who will be making the soap. Will it be just you or or others involved? How will the profit be divided?

Where will you make the soap? Is there any rent involved?

Will fuel (charcoal, gas??) be needed in the process.

This is a good start but we need to fine tune the business plan a little so we can project the profits and the sustainability of the program.

Comment 4 on Soap Project - Development

Also, the chemicals you have listed...Is this enough to only make the 400 liters?

Is there a cost difference if you buy the chemicals in larger quantities?

The 40 labels....are these to be printed by a local printer?

Comment 5 on Soap Project - Development

Hey munno, the members from kampala need the soap knowledge.

Comment 6 on Soap Project - Development

I will be the one making the liquid soap because it require little labor especiall for few littres like 400 and other women after teaching them how to make it.

At the centre.No rent is involved.

No fuel is required

Evvy Bryning said:

What are the labor costs? Who will be making the soap. Will it be just you or or others involved? How will the profit be divided?

Where will you make the soap? Is there any rent involved?

Will fuel (charcoal, gas??) be needed in the process.

This is a good start but we need to fine tune the business plan a little so we can project the profits and the sustainability of the program.

Comment 7 on Soap Project - Development

Good Luck dear, it has been a very long struggle , wish it could be successful this time.

Comment 8 on Soap Project - Development

Munnu,

Perhaps the best place to start is with a statement of purpose or goals.

Is this to be a community project or is this just your project?

Can you please write a brief description of what you want this project to accomplish. What you goals are?

Once we have that clearly defined the rest of the business plan can be organized so that the goals are met.

Comment 9 on Soap Project - Development

Well,at the start of it all this project was intended to help part of a community here in Gulu which really had nothing but depended on making the pyparius mats as their source of income year after year but remained still poor and I thought this would be much helpful.

However,The Lia community also needed this same help and really wanted to learn how to make liquid soap because our beads market was abit low and No market days but this liquid soap sells well and because there are no people who make but its needed by many large and small scale,I saw the need to have it all learnt round.However,It was not simple to get the knowledge to make but the all thing was to get trained in the city of Kampala and find out the raw material source and difinately get started.

And now if it gets started probably all members will have to be thought how to make it because its very simple and the market is there even the community members are the source of market because they will need to use it. Its a community project though I used my personal saving to get trained .I'll trained all the Lia/Ned members how to make it and we have alarge market.

Thanks y'all.

Comment 10 on Soap Project - Development

I wish only success for the project so that community of all the three centers of Gulu, Kampala and Opok benefited from it,not only specialised on one thing.

Comment 11 on Soap Project - Development

Excellent. I think it is a great idea to set this up as a community project to supplement the members income. And it will be very good for it to be available to all three centers.

So, here are my next questions:

The price that you list is to sell 5 liters for 7500US. Is this the price that you will sell the soap to members making it the wholesale price? If so, what price will they sell to customers for? This is assuming that they will buy the soap from you and then resell it.
If this is not a wholesale price, then how will the profits be distributed to the community?

I am asking these questions so we can write a solid business plan in order to get a loan to start this up. Right now it is just not clear how the profit will be used or the community will benefit. lets get it very clear from the beginning so there are no misunderstandings.

It is wonderful that you are so enthusiastic about this and have put so much of your own effort into it. I think it is a good idea and could be very successful but we need to get the plan really fine tuned.

Comment 12 on Soap Project - Development

I also forgot to ask you how long does it take to make the 400 liters of soap and how long do you think it will take to sell it. It would be good to know what you plan as the monthly production will be.

Comment 13 on Soap Project - Development

Its my pride to also answer the good questions that you have towards this project.The 7500 Ushs is the price for the consumers but the idea of wholesale and retail price wont be much differen but however to sell in wholesale will depend on the production capacity and the wholesalers who will intend to buy from us and sell in the neigbouring districts of Kitgum ,Lamwo and Pader and may be west nile.

Members them selves will be the source of market ,hospitals around ,schools and other institutions this means that many members will be involved in the production to suit the market demand but still with more members it will mean more capital and middle men will be eliminated but only if we will have to deal directly with the consumers in the different ares I had mentioned earlier. And the distribution of the profit will be distributed in the form of bananas as it was before where by you you partispate in doing sometime it means you will given bananas and at the end of the month you recieved it inform of cash ,because this production will be as group.(group production)

Making 400 litres depends on the numbers of people partispating and the size of the containers and time you have devoted to do it but generally it takes 24 to 48 hours .

Comment 14 on Soap Project - Development

Okay. I have more questions but will ask them later. I have to go to work now (here it is almost 6:30am) but later today I will try and set up a workspace for this project so we can get all the details spelled out in one place. It is sounding very good.

Comment 15 on Soap Project - Development

I have started a workspace for us to work on

I am having trouble making a link to it so I will just put the url

http://www.ned.com/group/nedugan da/ws/index/?e=editpage

I have listed all your information and in each category there are questions that need to be answered.

Comment 16 on Soap Project - Development

Munnu. Two questions.

Can you list 2-3 orgs that would buy the liquid soap if you had it tomorrow?

Who all is responsible for selling the soap in Gulu?

Comment 17 on Soap Project - Development

1.Norwegian Refugee Council(NRC)

2.Anaka Hospital and Gulu Hospital

3.War Child Holland.

I will be responsible but the all thing will be for the marketing department (Ned Uganda).

Comment 18 on Soap Project - Development

This is looking quite promising! Good work Munnu!

It looks like a 40% markup for these costs, which is not bad, but I think it wise to consider labor as a cost also after this prototype is tested. Am I correct in converting this startup cost amount to be about $250 US dollars?

Comment 19 on Soap Project - Development

I actually think the figure will be $300 needed to start the project.

There are no actualy labor costs. The members of the community have a system in place called 'bananas'. They participate in projects and earn bananas (points) and then at the end of the month their bananas are exchanged for a share in the profits. The number of shares they earn is based on the number of bananas they have earned.

Here are some more questions:

How many liters of soap do you project that you will makes each month
How many members do you think will participate in this
The group production of jewelry earns 1 banana for 2 hours of work. Will this be the same for the soap.
How many bananas will be earned for selling.
You have listed the cost of 5 liters as =7500. Is this the going rate
How much will you sell a smaller amount for like a water bottle full.
Is liquid soap currently available in the area or do they bring it in from outside

How much are the places like the hospital paying for the soap now

Comment 20 on Soap Project - Development

Munnu Morrish said:

1.Norwegian Refugee Council(NRC)

2.Anaka Hospital and Gulu Hospital

3.War Child Holland.

I will be responsible but the all thing will be for the marketing department (Ned Uganda).

These look good. Have you actually talked to them and will they agree to buy from you?

To work on your projections for production, can you estimate how much each of these would use.

Comment 21 on Soap Project - Development

What about quality control?

Comment 22 on Soap Project - Development

And on a more personal note...

Munnu Morrish, you are a shining star.

I am so inspired to see the seriousness with which you have pursued this idea so far. Months ago, I remember you asking me what you needed to do to get it off the ground and I told you to learn everything you could. Look how far you have come, and how much you know about soap now! When you've gathered the knowledge you need, the resources will fall into place - good on you for keeping faith in that. I am very impressed and proud of you. It's a pleasure to watch you grow through this experience. Congratulations - you will soon be there!

Comment 23 on Soap Project - Development

Munnu, great stuff indeed. Let me explore some ideas regarding funding this. Let's look at 3 different funding scenarios.

A traditional microfinance funding of 35% interest over 18-24 months.
A ned.com based microfinance based funding of 20-25% interest over 12 months.
a mirco-angel investment which then returns 5-10% of all future cashflow which would entail a permanent dividend (to then be reinvested in other local ventures) on an ongoing basis.

Which of these three looks most appealing?

Comment 24 on Soap Project - Development

Evvy Bryning said:

Munnu Morrish said:

1.Norwegian Refugee Council(NRC)

2.Anaka Hospital and Gulu Hospital

3.War Child Holland.

I will be responsible but the all thing will be for the marketing department (Ned Uganda).

These look good. Have you actually talked to them and will they agree to buy from you?

Robert Oketa(breakfast cordinator) works in the security department with the NRC and is the one working on the connecting us for this source of market as well as War Child Holland.

For the case of the Anaka and Gulu hospital,George Ovola and Finny have some control on the departments of cleaning and maintaining the hospitals so they promised me they would buy our liquid soap.

Gulu University is another market.Katusi Denis is incharge of compound designing and maintainance and he said they can buy up to 60 litres a month

Gulu clinical school.Micheal Akena the production manager Gulu is connecting this and he said they use 80 litres amonth

To work on your projections for production, can you estimate how much each of these would use.

NRC 50 litres

Gulu University 60 litres

Gulu clinical school 80 litres

WAr Child 60 litres

ACDI-VOCA USAID 10litres (micheal)

Comment 25 on Soap Project - Development

Mark Grimes said:

Munnu, great stuff indeed. Let me explore some ideas regarding funding this. Let's look at 3 different funding scenarios.

A traditional microfinance funding of 35% interest over 18-24 months.

A ned.com based microfinance based funding of 20-25% interest over 12 months.

a mirco-angel investment which then returns 5-10% of all future cashflow which would entail a permanent dividend (to then be reinvested in other local ventures) on an ongoing basis.

Which of these three looks most appealing?

3 I think is the best just because it will the be reinvested in other local ventures) on an ongoing basis.I f I understood it correctly.

Thanks Mark

Comment 26 on Soap Project - Development

Christina Jordan said:

What about quality control?

Inventory team

will have to see the quality of the liquid soap is meeting the market demand.

Comment 27 on Soap Project - Development

For a business plan, a bank might want to see a few aspects of quality control.

For each ingredient that you receive, what can possibly be wrong with it, and how can you evaluate it for quality? Maybe it's important that the Sodium Metasilicate be dry, and a quick quality check is to see if it hasn't clumped because of moisture. Perhaps the PH tester could be used occasionally on incoming sulphonic Acid (sulfonic might be a more common spelling) to check its quality as well.

The final product might have a test for the thickness of the liquid soap. How should it look when a spoon is dipped into the soap, and lifted out? If the soap drips in a steady stream, you pass, if it sticks to the spoon too much then it fails. If the soap is too thick, can it be thinned so that it does pass? Does any part of the process have to be changed on especially hot days? etc.

(caveat: I know little about soap and less about business plans.)

Comment 28 on Soap Project - Development

Munnu, don't forget that quality control has a cost. The inventory team will need to be trained and paid somehow. You'll need to factor that in. Will you have a soap production manager? Will that person earn anything more than the other banana earning participants? There is also a cost there to consider. You might put some thought into how to work that into your calculations.

Comment 29 on Soap Project - Development

I have spent that last few days doing some research and also talking to a lot of people about this project. I have a lot to discuss so I am going to break it up into segments to make it easier to follow and to comment on. I will be cleaning up and updating the workspace also in the next couple of days. My input will follow.

Comment 30 on Soap Project - Development

Financing

It is my oppinion that we should not take out a loan to start this project. Having big loan payments and high interest will slow down the profitability of the project. I really think the best way to go is to get someone or some group to donate the start up money.

I have already spoken with some people and this is very doable, especially if it is set up to benefit the community not only for this project but will grow to finance future projects at the centers. I am quite confident that I can raise the seed money necessary to get this fund started.

Some of the input I have gotten from people who will be willing to donate are:

The projects must be for the community and should involve at least 10 members to qualify. This means that a minimum of 10 members must sign on to the project and agree to work it. By making it strictly voluntary, you run the risk of the project only involving 1 or 2 people and then it becomes more of an individual project rather than a community effort.
This start up money will not be a loan that has to be repaid. Instead, a percentage of the profits which will be determined will be taken off the top and put back in the fund. This will then allow for other projects to be funded.
The funding of projects will be on a rotating basis to make it fair for all the centers. For instance, this project is for the Gulu center. The next project to be funded would have to be for Kampala or Opok Farm. This way all communities have an opportunity. In the event that other centers do not have projects to submit, then the same center could get funded again if they submitted a viable project.
We would need to determine how many projects could be funded each year. Possibly 1 project each quarter (4 per year) This would need to be discussed

Comments? Suggestions?

Comment 31 on Soap Project - Development

Safety First

I am very concerned about safety in starting this project. The only safety that is mentioned in the plan so far is a gas mask and after doing my research, I do not feel like this is enough.

Here are some suggestions for the safety policy.

It is vitally important for the well being of the company and the workers, that safety is insured, hence the phrase, “Safety First!”

2 The work area should be kept clean and free of debris. The floor should be swept daily and all containers and utensils should be washed after use.

Alkali solutions are caustic. Rubber gloves must be worn whenever handling alkali crystals and solution.
Safety glasses must be worn while mixing alkali to protect the eyes from splashing. Even the finished product that gets in the eyes can burn.
Care should be taken not to breathe any of the fumes that rise up from mixing the soap products. Gas masks should be worn and the work area should be located away from where people live and work to protect them from the fumes.
Clean, cold water must be close at hand in case of alkali or fire burns. Rinsing eyes or skin with cold water is the standard antidote for exposure. Milk contains lactic acid and will neutralize alkali should it get in the eyes or be ingested. This may prevent blindness that can result if alkali remains in the eye.
Lifting large kettles and containers of ingredients should be done with care and with the help of co-workers.

Safety equipment needed:

More than one gas mask At least 6 pairs of safety glasses or goggles buckets to hold cold water in case of spills At least 6 pairs of rubber gloves

These items will need to be priced so they can be added to the budget. Please note that this is not a dictate but I strongly suggest these items be in place for the safety of the workers.

comments? suggestions?

Comment 32 on Soap Project - Development

Pricing

When starting a new product line it is not always the best plan to sell at a very low price. A small scale production cannot survive and grow with a very small profit margin and when they have to raise their prices they run the risk of losing a lot of their business.

Research the current market. List the prices of all the other liquid soaps that are available.

Test the other products and make a list of what is good about them and what is not so good.

Determine your price by comparing your product with the others. Some questions to ask are:

How much do the other products cost:

How much of each product is needed to make a basin of soapy water for washing dishes.: Does your product use less, more or the same?
How do the other products smell?: How does your product smell?
How do the other products feel on the skin?: How does your product feel?

After you get a good comparison done it will be easier to price your product so that it is a saleable and yet profitable product.

I know that you have set your price in the budget at =7500 for 5 liters. How did you arrive at this price? It seems rather low to me. We need to list all of the different containers you will sell in, how much in is each type of container, and list the price of each.

It is sometimes effective to give a discounted price for larger containers. This encourages buyers to purchase larger quantities to save money.

comments? suggestions?

Comment 33 on Soap Project - Development

Marketing

The first rule of marketing, and I know this since this is the field I work in, is you MUST have a plan. You cannot expect to succeed without a plan to follow. The plan can and will change as the business progresses. Currently your plan is to just have people sell and that is too vague. There needs to be a plan in place before the first bottle of soap is made.

Some things that will be important in the marketing of the soap are:

Eye appeal What kind of containers will the product be in?

What will the label look like?

What will the name of the product be? It should be something catchy and easy to remember

Will the color of the soap be attractive?

Once the product is made the most important aspects of marketing will be

Quality, consistency, availability

It must be a good product that works each time

It must be the same. Each batch, each bottle, each liter MUST be the same quality, look the same, smell the same.

It must be available. Customers will not be faithful if it is available one week but when they go to buy it again it is not to be found.

A couple of ideas for marketing:

Solicit sales to institutions, restaurants, organizations and other groups. You have already started on this and that is good but more will need to be done and FOLLOW UP will be very important. If you sell 5 liters to a restaurant you need to go back to them to get the next order in a timely manner. Ideally this will be when they are low but not completely out. If they run out and you are no where to be seen they will just buy somewhere else.

Get members to participate by setting up a display of soap in their market booths. I know that there are many members who run booths in the markets selling vegetables, charcoal and other food stuffs. Convince them to also sell the soap. They will turn the money over to the project from the sales and will earn a commission for each bottle they sell.

Set up a place at the center to sell the soap. Give the members a "NeD" discount to get them buying the soap. Remember, the more people who use, the more people will hear about it, the more people will want to buy it.

In the beginning you will have to convince people that they want your soap. One way to do this locally is to hold demonstrations. Here at our local markets they demonstrate new products. For instance if a person is selling a vegetable chopper, they set up a table and start chopping vegetable and they talk about the chopper, how easy it is to use, how convenient it is, how much time it will save. And they sell sell sell. It is very effective.

Your demonstration could be to have a basin of water and show how little you have to use to get all this soapy water, let them put their hands in the water to feel how nice it is on their skin. Wash some dishes and show how clean they come. Wash a shirt or another piece of clothing. Talk about how dirt wears down the fibers of the clothes and makes them wear out faster. Clean clothes last longer. Show them how the dirt is removed in the soapy water. Let them smell how nice their clothes will smell using the soap. And then sell, sell, sell. It works.

comments? suggestions?

Comment 34 on Soap Project - Development

Organization

I absolutely agree with Christina. This is a voluntary project but you will need to have a few people in place that are permanent and consistent.

Production manager: The most logical person for this is Munu since he is the one who knows how to make the soap.

Quality Control Manager: Very important for this to be the same person so that it is done the same on each batch. If you just use anyone, your quality could be very different each batch.

Marketing Manager: Someone must be in charge of keeping track of the product. Who is selling and how much. Who has product in the booth at the market. How much is sold from the center. This should be someone who can keep good records as this will be critical in the profitability of the project.

At the beginning, since money will be scarce, these positions could be paid in extra bananas. Later, as the project becomes more successful they could switch to paid positions.

comments? suggestions?

Comment 35 on Soap Project - Development

Evvy, I have been following your comments with admiration. The only thing I would add is that I would want to know what the waste products are, are they potentially harmful, and is there a cost to waste disposal.

I do have some thoughts on soap making as a community activity. Right now it seems that the bananas issued will be a claim on soap making profits - I am not clear on how bananas issued for bead making and bananas issued for soap making interact. Perhaps both are redeemable for other things beside profit - such as internet access. If so, how are those accounts reconciled? I do not want to stray off topic so I am going to set up a new discussion for this - advocating a full fledged community investment enterprise.

Comment 36 on Soap Project - Development

Evvy, you are letting your COO side out, great work...just fantastic.

Comment 37 on Soap Project - Development

David, You are so right about the waste products. I do have that on my list but just hadn't gotten to that yet. But, since I am very much an enviromentalist, I think it should definitely be addressed.

Mark, thanks for the encouragement. I am having a ball!!

Just to let everyone know, the banana program works like this with the group craft production and I assume would be similar in other projects.

A member earns 1 banana for every 2 hours they work on group production of beads and jewelry during the month.

At the end of the month the group production jewelry is bought on market day.

All the bananas are added up and the amount of money earned is divided by the number of bananas given. This determines the value of 1 banana.

example: 500,000 shillings are paid for the jewelry.

125 bananas have been earned by the group

therefore, each banana = 4000 shillings.

so if mary has 15 bananas, she would get 60,000 shillings: Susan has 9 bananas, she would get 36,000 shillings George has 3 bananas, he would get 12,000 shillings

Everyone gets paid for their level of participation and participation is strictly voluntary.

I do not know if they can exchange for other things other than cash.

With the soap project the total profit would be divided by the number of bananas given to determine the value of each banana. The more soap sold, the more value to the banana. This is why is it so important to have the guidelines for how many bananas will be awarded ironed out before we start.

Comment 38 on Soap Project - Development

Sustaining the Business

The main reason why so many small businesses fail here in the US is that the owners try to live off of the business before it is ready to support them. They make the initial investment and get started but then they start taking out the profits to live on. Soon, the money is gone and they have no more resources to invest in the business. This why there are such huge numbers of small businesses that fail in the first year.

The flaw that I see in the business plan so far is that there is no provision for using part of the profits to keep the business running. You make the first 400 liters of soap, sell them, split up the profits and now what? You now need money to buy the raw materials to make the next batch. Where will that come from?

It is actually quite simple. A percentage of the profits must be taken off the top to re-invest in the business to make it sustainable. That will mean that the members, at least in the beginning, will make less money for themselves.

According to your plan the second batch of soap will cost 373,250 to produce and market. Lets just round that up to 375,000 so we have a little cushion.

That means it will cost 937.50 shillings to produce one liter of soap This amount will need to be withheld from the profits to make the next batch of 400 liters

You plan on selling the soap for 7500 per 5 liters

This equals 1500 shillings per liter

That means a profit of 562.50 shillings per liter

That works out to 63% of the profit going to pay for materials leaving 37% as profit. That is on the low side. I work in the food industry and the profit margins average 42%

Now you will have to put a percentage of the final profit back into the community project fund. Lets use 15% to start.

That means 84.38 goes into the fund leaving a net profit of 478.12 per liter

Total figures for 400 liters:

600,000 in sales

375,000 invested back in the business

33,752 put into the community project fund

191,248 net profit to be split.

If 10 members participated equally that would mean they would each get approximately only 19,125 shillings for each 400 liter batch that is made and sold.

So some questions to be asked:

Is the product priced correctly?

How could we cut costs to increase profits? Like buying chemicals in larger amounts at a discount.

Is 10 people too many or is the number actually too low.

How many liters do you think can actually be sold in one month?

comments? suggestions?

Comment 39 on Soap Project - Development

I think you should count on putting the shs 375,000 plus a bit more back into the business so that it can grow beyond 400 liter batches.

The number of people doesn't really matter if you're working with bananas. Everyone will want to have the opportunity to participate. One of the big problems we had with the invisible children project was that only some members benefitted and this created divisiveness. Even if the bananas they earn only pay for a members transport to come and spend an afternoon making soap, they will all definitely want the opportunity to learn. So you may have 70 people earning bananas that all have a very low value at the beginning, but then some will find they are better at it than others or they have more time to put in.

I am concerned though, that the banana value shouldn't be calculated until the soap has actually sold - just meeting a production quota is not enough if the product doesn't get sold. If you have a bulk order to meet, then it's easier. But I am afraid it's going to be hard to get any bulk orders until you've actually got a product people can try for themselves.

I'm wondering if the returns on the first batch won't need to be calculated differently somehow. Not sure what I mean by that, though.

Comment 40 on Soap Project - Development

Christina Jordan said:

I think you should count on putting the shs 375,000 plus a bit more back into the business so that it can grow beyond 400 liter batches.

Yes, I agree. Ideally the business should be designed so that there will always be funding available to make the soap that is needed.

So you may have 70 people earning bananas that all have a very low value at the beginning, but then some will find they are better at it than others or they have more time to put in.

That is sort of how I figured it would work in the beginning. I only used 10 as a figure for example since I used that figure as the necessary number for starting a project.

I am concerned though, that the banana value shouldn't be calculated until the soap has actually sold -

Absolutely! I guess I should have made that more clear. The profit figures I was using was for SOLD product. I was assuming in my calculations that all 400 liters were sold. Until a product is sold, there is no profit.

I'm wondering if the returns on the first batch won't need to be calculated differently somehow. Not sure what I mean by that, though.

I am not sure. Maybe this needs more thought and discussion. I am waiting to input more when I get some response from Munnu and maybe some other members.

Comment 41 on Soap Project - Development

Just a couple of thoughts re financing.

You might see if the supplier of chemicals is prepared to work, at least in part, on a "partnership" basis.

ie you give him an agreed cost price, and then a share of the net profit.

Or maybe you give him a small share of the gross revenues in return for time to pay = credit.

There are many ways to configure a partnership.

Alternatively you get an investor as a "Capital Partner".

The deal is that he puts up his money for the working capital to pay the supplier, and in return you give him x% of the GROSS revenues, and pay your supplier and yourselves from the balance (100-x)%.

For as long as you use his money you give him this "Equity Share".

If you pay back half, then his "Equity Share" drops by half.

Evvy Bryning said:

Sustaining the Business

The main reason why so many small businesses fail here in the US is that the owners try to live off of the business before it is ready to support them. They make the initial investment and get started but then they start taking out the profits to live on. Soon, the money is gone and they have no more resources to invest in the business. This why there are such huge numbers of small businesses that fail in the first year.

The flaw that I see in the business plan so far is that there is no provision for using part of the profits to keep the business running. You make the first 400 liters of soap, sell them, split up the profits and now what? You now need money to buy the raw materials to make the next batch. Where will that come from?

It is actually quite simple. A percentage of the profits must be taken off the top to re-invest in the business to make it sustainable. That will mean that the members, at least in the beginning, will make less money for themselves.

According to your plan the second batch of soap will cost 373,250 to produce and market. Lets just round that up to 375,000 so we have a little cushion.

That means it will cost 937.50 shillings to produce one liter of soap This amount will need to be withheld from the profits to make the next batch of 400 liters

You plan on selling the soap for 7500 per 5 liters

This equals 1500 shillings per liter

That means a profit of 562.50 shillings per liter

That works out to 63% of the profit going to pay for materials leaving 37% as profit. That is on the low side. I work in the food industry and the profit margins average 42%

Now you will have to put a percentage of the final profit back into the community project fund. Lets use 15% to start.

That means 84.38 goes into the fund leaving a net profit of 478.12 per liter

Total figures for 400 liters:

600,000 in sales

375,000 invested back in the business

33,752 put into the community project fund

191,248 net profit to be split.

If 10 members participated equally that would mean they would each get approximately only 19,125 shillings for each 400 liter batch that is made and sold.

So some questions to be asked:

Is the product priced correctly?

How could we cut costs to increase profits? Like buying chemicals in larger amounts at a discount.

Is 10 people too many or is the number actually too low.

How many liters do you think can actually be sold in one month?

comments? suggestions?

Comment 42 on Soap Project - Development

I'm afraid I have another one of my off-the-wall thoughts. I was thinking about packaging. As I understand it the product is like dish washing liquid detergent--good for washing pots and pans, and clothing.

Here in the USA a popular treat is flavored water in a narrow plastic bag that is frozen, so it makes a frozen pop; these are about 1.5 liquid ounces US or about 5 deciliters. That's a good quantity of this soap, probably enough for a week's worth of washing for a household. Buying in this small quantity might be something many people could afford.

I know that Uganda now has restrictions on plastic bags. But I looked to find rolls of plastic tubing online. It looks to me that this material would make low-cost containers for the product. It might entirely inappropriate--just me thinking aloud here.

We are used to having containers that make small quantities of this kind of soap easy to measure out for each use.

I am old enough that the dispensers for soap seem very new to me. It seems like they invent something new every year for the way soap is dispensed.

If plastic bags would be a way to package this soap, it may be that inventing a dispenser to make using this soap easy would be a way of opening the markets to your product.

The simple machine that comes to mind is a top part which is a hook to hold one end of the bag. At the other end is a spring clamp on a lever. When the lever is squeezed a small quantity of soap product is released. This machine could be made out of heavy gauge wire without specialized tools.

Always I worry that my half-thought out ideas are a distraction. I don't mean them to be. My reasons for mentioning this idea is simply to make the point that the packaging of detergent is very important. A good idea for packaging could increase the value of the product.

Comment 43 on Soap Project - Development

There's oodles of great questions and ideas here. Oodles. And they are all great, and help thinking to the next level.

I was pretty close to Munnu's age when I started by first biz, and I could not have answered most of the questions here when I had started out my first biz.

It could be we need to consider what's been asked with all these questions and really look at the crucial ones. And really look at a test market, in the true sense of the term, and see what happens. Saftey first, that is crucial. Beyond that, it it much a matter of faith. Could it crater? (blow up?) Of course. I've had plenty of things blow up. Also built a multi-million dollar profitable business and help others do the same. Fail small. Start small. Try things.

If 10% of "gross sales" goes back into other community projects I'd be thrilled to invest $100 towards the trial of this business venture...maybe more. And while I think all the questions here need attention, I don't want to get into analysis paralysis. I'd rather test and see what happens. Let's get pictures. Online reports every other day or so...and see what happens.

The estimate need to launch is $250. Think we can get $500 and see is it can sustain itself from the ground up? 10% back into other community projects from gross sales? Build out the details and making it better as it is happening? I'd put $100 towards that. Anyone else?

Comment 44 on Soap Project - Development

Chris, thank you for your input and your idea is certainly something to think about but I am not sure it is right for this type of project. First, it may end up being way to complicated for the members to manage. And, second and most important, I really think we need to avoid forming partnerships with outside businesses until we know exactly what we are doing. We have learned from experience that this can create difficult situations in Africa.

John, your ideas about packaging are also interesting but for this first project we really need to keep it as simple as possible. We already have recycled water bottles available and will use larger containers that will be purchased for the larger amounts. As far as very small quantities, in Africa they are very accustomed to bringing their own containers and buying just what they need. It is something that is built into their market places. A vendor has a large drum of oil for instance and can sell it by the liter, or just sell a cup full. Somehow it works and I don't want to get too complicated in the beginning.

Mark, thanks for the reality check. I like your term "analysis paralysis". Something I definitely think could easily happen.

I believe that this project will be the first that will be sponsored by the Life in Africa -USA Community Project Fund.This will be tied to one of our focus areas... Income Generation. I will be soliciting funds to seed this and if all goes well the money will be in place by the end of this month. (I will remember your offer of $100 :) hehe) I will be working on the Life in Africa group page this week to spell out how the program will work. So, I think the financing will not be a problem.

So, Munnu, we need to get moving. I have put a Things to Do list on the workspace. Please get these things done and questions answered as soon as possible. I would suggest you get a few other members to assist you. We need to get the actual product started, the name, and the price. From there we will be able to move forward very quickly. Let me know as soon as you are ready and we will move on to the next step.

Comment 45 on Soap Project - Development

Some of this questions needs community to first brainstorm and then I have all it posted here forinstance the name of the soap and few other things.probably tomorow meeting in Gulu will have ready.

Comment 46 on Soap Project - Development

Great Munnu, I look forward to hearing what the community comes up with.

Comment 47 on Soap Project - Development

Thanks Evvy

I understand your misgivings, but you won't find anything less complicated than a revenue or production-sharing partnership.

What's complicated about saying we get x% and you get (100-x)% of everything we sell using your stuff?

As opposed to 10 pages of boilerplate terms and conditions the customer doesn't understand a word of?

Partnership structures like this have been around since the Year Dot: we're only codifying what people do already in most less developed countries.

It's not the members you'll have trouble with, it's the "partners" who are accustomed to the toxic legal agreements they use now.

But as you say - you know that already!

Best Regards

Chris

First, it may end up being way to complicated for the members to manage.

Evvy Bryning said:

Chris, thank you for your input and your idea is certainly something to think about but I am not sure it is right for this type of project. First, it may end up being way to complicated for the members to manage. And, second and most important, I really think we need to avoid forming partnerships with outside businesses until we know exactly what we are doing. We have learned from experience that this can create difficult situations in Africa.

Comment 48 on Soap Project - Development

I am aware of an organisation that is making soap amongst rural co-operatives in Nigeria. It is one of their most successful products and sells well in the local market.

My ambition for them is to take advantaged of the booming fragranced cosmetics market in the West, particularly as cosmetics made from natural products are soon to be able to be registered as Fair Trade products.

The addition of a bit of banana or cocnut into a soap seems to multiply its value by a factor of 3, especially if it is a natural product. I really feel that tropical countries have an opportunity here, which has yet to be capitalised upon.

If you have such a "fragranced" product and would be interested in selling it to the UK, then let me know - I'll help!

Comment 49 on Soap Project - Development

Hi Ben, Wow, thank you so much for chiming in. Currently the product the community will be making is chemical based but I also would like to see the development of an all natural product but that will be down the line a bit. This is one of the things I will be discussing with the group when I go to Uganda for a month in Dec.

Once we have such a product developed I will be happy to have your help. Stayed tuned and thank you for your interest. I would also love to have any contact information you have for the group in Nigeria. Can you point me to them?

Comment 50 on Soap Project - Development

Ooh! Lets figure out what we need to grow at Opok Farms to eventually make natural soaps!

Comment 51 on Soap Project - Development

you read my thoughts! What an opportunity

Comment 52 on Soap Project - Development

Munnu needs to keep up his correspondence with Kaenfa here in Thailand. All of the soaps, shampoos, conditioners and body oils they make are organic. I think one of the things that was suggested was that Munnu catalog the available plants and is he wasn't sure what they were or what to do with them, to seal them and send them to Kanefa and he would test them for LiA.

Comment 53 on Soap Project - Development

Good info to have. I was not aware of this. I am working very hard to get both centers back to participating on line. With both centers moving to new locations and Onet closing down it is really hampered our online activity. Give it a couple of weeks and I think everything will get back to a better scenario.

Comment 54 on Soap Project - Development

Thanks Linda this is where we ended at the moment with kheanfa.

local soap making Inbox

munnu kipsie2lov to kheanfa

Jun 27

I m called munnu morrish and I very much appreciate the work of linda to connecting me to you.I hope I will get the best of the desired and the struggle I had been trying to make things happen.

I have moved in most of the areas in search of making liquid soap and help the local poor community and me grow but is been a big challenge that I had not yet suceeded .I will put my trust in you for the benefit of the entire local community.

below are thing things really I dream of making :liquid soap,solid soap though to come later.

I will very much appreciate you and the Omidyar community want to know how far I and you are doing it.

Thanks for now

Below are what we have locally for the soap making but however nobody have ever made it.

wood , ash lye,animal fat [from pigs]

Reply Forward

Jul 9

Dear Sir

What our community do many kind of community products. Such as herbal shampoo, dish detergent, wash clothes detergent, liquid soap which are very easy to the villeger to do. We do not have to invest a big money, only one or two big pot is enough and indigenous herb plus some little chemical material.

I just would like to know some datas.

How much money that the involved villegers pay for soap product?

What amount of soap you wasnt to make per week?

Do you have any indigenious herb in your area?

Can you find some chemical material Which I will mention later?

If I know these datas I will think over what we can cooperate

Sincerely Yours, Kaenfa

munnu kipsie2lov <munnikipsie2lov@gmail.com> wrote: - Show quoted text -

Reply

munnu kipsie2lov to Kheanfa

Jul 12

1.Five liters cost 7500Ushs

2.400litres is best per week

3.It would be very much better to know W have many kinds of herbs though I dont know there scientific names.

4.Yes.But they may be in the city which I can go and buy and this will require some Capital though

And We made sample of Lighting candles.

Thanks for your concern to help.

Linda Nowakowski said:

Munnu needs to keep up his correspondence with Kaenfa here in Thailand. All of the soaps, shampoos, conditioners and body oils they make are organic. I think one of the things that was suggested was that Munnu catalog the available plants and is he wasn't sure what they were or what to do with them, to seal them and send them to Kanefa and he would test them for LiA.

Comment 55 on Soap Project - Development

Evvy Bryning said:

Hi Ben, Wow, thank you so much for chiming in. Currently the product the community will be making is chemical based but I also would like to see the development of an all natural product but that will be down the line a bit. This is one of the things I will be discussing with the group when I go to Uganda for a month in Dec.

Once we have such a product developed I will be happy to have your help. Stayed tuned and thank you for your interest. I would also love to have any contact information you have for the group in Nigeria. Can you point me to them?

The organisation is Nehemiah Foundation International and their web-site is www.nfiafrica.org.

Good luck with your project.

Comment 56 on Soap Project - Development

I met Norbert and discussed using the organic means in making this liquid soap.forinstance using Lemon Grass..in the process.

I believe when the first test is done,and its sucessful,we will have liquid soap with different aroma and smell.

The process is distilation.

Comment 57 on Soap Project - Development

After meeting with the community discussing ,brainstorming ,the soap name will be called... GULU SOAP WORKS

Comment 58 on Soap Project - Development

You might then be able to say "Gulu Soap Works Soap works!"

:-D

Comment 59 on Soap Project - Development

Yeah, I like that. Congrats to the commnunity members. I think some progress is being made.

Comment 60 on Soap Project - Development

Thank you so much Ben. I visited the website this morning and was so impressed with what they have done. I love their goals and I see a great similarity with the goals of the communities in Uganda. I plan to contact Emmanuel. I can see that there is a great deal we can learn from him.

Ben Parkinson said:

Evvy Bryning said:

Hi Ben, Wow, thank you so much for chiming in. Currently the product the community will be making is chemical based but I also would like to see the development of an all natural product but that will be down the line a bit. This is one of the things I will be discussing with the group when I go to Uganda for a month in Dec.

Once we have such a product developed I will be happy to have your help. Stayed tuned and thank you for your interest. I would also love to have any contact information you have for the group in Nigeria. Can you point me to them?

The organisation is Nehemiah Foundation International and their web-site is www.nfiafrica.org.

Good luck with your project.

Comment 61 on Soap Project - Development

Hi Munnu,

You are all making such a lot of progress. Its exciting to seeing it unfold.

I've looked at the workspace and I just need a couple of clarifications.

The soap that is already for sale you say sells for =28,000. What quantity does this buy?

Also, is there liquid soap being sold in small quantities in the local market or is 3 liters the smallest size?

Since all the chemicals come from Kampala it would be my suggestion to definitely buy in larger quantities after the first test batch. The transport will be too expensive to do for each batch.

And finally, we need to rethink the packaging concept. I spoke with Christina yesterday and found out that we no longer have the large number of bottles to recycle. So, how will we package the smaller quantities? John posted earlier about an idea. Can you go back and take a look at that and see if it might be possible.

I think everthing is looking really good. Is the community getting behind this and are they excited? Would love to hear what they are thinking and saying.

Comment 62 on Soap Project - Development

Evvy made the point earlier about packaging in recycled bottles being the best just to get this project off the ground. That you don't have recycled plastic bottles now on hand, probably means you'll have to find some way of collecting some bottles to recycle.

I have some ideas about packaging, but they get a little far afield. I started writing them here, but then thought it's not the best place. So I came up with a solution, I'll post it on a blog at Razoo.

Earlier tonight I suggested to Munnu that he become the moderator of the Appropriate Technologies cause at Razoo. There are some other reasons I'd like him to have that, so please don't grab the moderator position unless he decides he doesn't want it. But you can go there later to see what I posted if anyone is interested in reading my post in my mad scientist mode.

Comment 63 on Soap Project - Development

Ummm. The discussion forums at Razoo are rather empty at the moment. o/net makes up 2 of the top 6 orgs, yet there is no discussion there. None. A couple posts a day in an entire group. For now seems like posts are best done here...unless you know something I don't know.

Comment 64 on Soap Project - Development

I gotta be honest. I have been so dang busy I still haven't had time to figure out Razoo yet. Maybe I will have time next week. I didn't know they had a place for discussion. Where would I find it?

Comment 65 on Soap Project - Development

Evvy, that's part of the User Interface problem. It takes too much digging to get to any real discussion area. And once there...as it's too hard to find...no one is really talking.

Comment 66 on Soap Project - Development

Well, that makes me feel better. Thought I was a little dumb cause I didn't see it. Maybe later.

Comment 67 on Soap Project - Development

Razoo >> my world >> my groups >> your group.

It is too deep down really.

Back to soap

Comment 68 on Soap Project - Development

LOL, yes but I'm too off-topic. There is a specific problem: packaging about 100 gallons of liquid detergent. We want this project to fly.

The problem of packaging liquid soap, while not of huge consequence, is a wide spread one with considerable significance.

David pointed out the issue of waste disposal as a cost. And Ben pointed out the market demand for natural products. What these two points reminded me of is "Natural Capitalism" a book by Paul Hawken and Amory Lovins. Actually I haven't read the book. But one idea along those lines is everything should either decay safely to dirt or recycled.

The chemical industry has taken seriously turning the costs of pollution and turned the assumption around to how their processes turn pollution into product.

When tinkering around in my head about packaging designs, I started with the notion that most dispensers for liquid soap in public places basically are holders for a plastic bag--a bladder of soap.

I've looked into actually buying relatively small quantities of common plastic containers new and have been astounded by how much they cost. So I thought the packaging we in the West are familiar with simply too expensive.

So the bladder idea for packaging made some sense. I checked into it and rolls of plastic tubing for covering parts to be shipped are available in various widths at low cost. Obviously the ends of the plastic would have to be sealed by heat. It seemed possible to package liquid detergent this way at a reasonable cost.

Such packaging has some challenges, among them they would work best with some dispenser. A more fundamental challenge is the plastic bladder when empty is a kind of pollution unlikely to be recycled, and won't rot any time soon.

So I tinkered around in my head a bit more with the problem of packaging liquid soap. It's an interesting challenge. It's not that I have a solution, but the outline of various possible solutions seemed visible.

The notion of making a new invention for this project seems ludicrous. But if I could think of plausible solutions for this packaging problem in an off handed way, it doesn't seem this is an insolvable packaging design problem. What if it were an open source challenge? What if thousands of people tried to solve this problem? I bet good solutions would come up.

Ben's point about natural soaps might also apply to natural packaging. So if some good packaging method for liquid soap could be made in Gulu maybe the packaging would be easier and more profitable to export than soap.

I've written too much, and I don't mean to be distracting. My point that this problem seems to lend itself to some crowd sourcing. Perhaps more targeted than that, but say a project for Industrial Design student or even regular folks. I guess another point is the idea of leap frogging in technological advance. There's no reason why small scale manufacturing in developing countries cannot be innovative practitioners of natural capitalism. Indeed, I suspect that designs for the real world will come from projects like this one.

Comment 69 on Soap Project - Development

John Powers said:

Indeed, I suspect that designs for the real world will come from projects like this one.

I have read Natural Capitalism and one of the points it makes is the waste inherent in individual packaging of things like cleaning supplies. According to the book the solution is for each of us to "own" a soap container and take it to be refilled whenever it is empty.

Comment 70 on Soap Project - Development

Reminds me of my younger days in Derbyshire, UK when many Pubs had an "Off-sales" window, and you would turn up with a jug, ring the bell, and they'd open the window and then would "pull" a couple of pints straight from the barrel.

Nostalgia isn't what it used to be....

...and neither is the beer... ;-(

David Braden said:

John Powers said:

Indeed, I suspect that designs for the real world will come from projects like this one.

I have read Natural Capitalism and one of the points it makes is the waste inherent in individual packaging of things like cleaning supplies. According to the book the solution is for each of us to "own" a soap container and take it to be refilled whenever it is empty.

Comment 71 on Soap Project - Development

Hi Chris and David,

Thanks so much for this idea. It really goes along with my way of thinking as well. First, I am very much concerned about the environment and having been to Uganda and seen all the plastic, especially bags and wrappers, laying all over the ground it is troubling to me to think of adding to the problem. Especially in rural areas where there are little or no designated dumping locations.

I agree 100% on the idea of the refillable soap container and think it could really work well in the local markets. It could even be a good marketing tool. The first purchase of the soap would include the container with the price adjusted to include the cost. Then the refills would be cheaper so the buyer would see the value of reusing the container. I did a little research and I don't think the cost would be too high.

Perhaps Munnu could get some prices on empty containers that can be purchased there so we could come up with a plan.