Increase my raw materials inventory for my soap business

Nicholas

Nairobi, Kenya

100% paid forward

Entrepreneur

Name

Nicholas

Member since

December 2014

On-time repayments

125 installments  •  46%

About Me

I am a young ambitious IT professional in Nairobi-Kenya and I have always had a passion to venture into the cottage industry. I have a bachelor’s degree in IT and have a temporary day job but I know that in I cannot transfer my degree to my son or daughter, however, if I successfully built a business empire, I can teach my children and leave them with a legacy to help then sustain their livelihoods as well as benefit the generations to come.
The cottage industry in Kenya is largely untapped, with mostly foreigners who have the financial muscle to start large industries taking advantage of the highly uncompetitive industry to produce this highly used commodity. In Kenya, soap has become one of the fastest moving and widely used commodity after cooking oil and salt. The soap-making industry has been dominated by less than 10 players for decades (mostly oil refinery companies since they already have the main soap-making ingredient, cooking oil.
Even so, the high demand from the vast Kenyan population of over 52 million people has stretched these companies hence the reason why they have been propelled into prominence. Assuming that every Kenyan takes a bath at least once a day, and does home laundry at least twice weekly, then you don’t need to be a great mathematician to guess the enormous amount of cash that Kenyans spend on only 10 soap brands. In short, the business is very lucrative even for new entrants like me.

I started the business of soap making last year (March 2021, but the business was not operational until July) mainly because I had (still do have) a big challenge of raising enough capital to buy the necessary equipment and raw materials. A plodder alone costs between KES 350,000 – 500,000, then you need some more money to purchase a three roll miller, (KES 400,000), cutting machine (KES 250,000), Stamping machine (KES 50,000), Automatic labeling and wrapping machine (KES650,000) and other auxiliary equipment like conveyors, vacuum pump, embossing/stamping moulds, etc. In total, to install a complete bar soap production line, you need a capital base of around KES 3 Million! (Conversion rate: 1 USD = KES 110)

However, after consulting with the professionals in the industry, I was advised that I could start off with as little as KES 30,000 ($270). I started by taking baby steps (comparing it to a marathon and not a 100 meters sprint), by starting small, making a lot of mistakes, and learning in the process as I grow.
I started off by buying a few basic pieces of equipment like a scale, a manual sealing machine, a thermometer, a locally fabricated soap mould, and start-up raw materials to make a few dozen of bar soap.

My Business

I currently have two brands in the market; a multi-purpose laundry bar soap and an organic rice soap and I intend to expand to other products like medicated soap, powder detergents, hand wash, shampoos, bleaching agents, and other industrial household chemicals like toilet cleaners, etc.

On average, I produce one carton (12 bar soaps each) per day, making a gross sales of $12 (approx. $240 per month. After expenses (raw materials $160, water and electricity bill $10 per month). My net profit is approx. $70. I use some of the profits to feed my family, pay my kids' school fees, and the rest, I use to buy more ingredients.

Project Proposal

Currently, because of lack of enough capital to buy raw materials in large quantities (which should be saving me some cash if I bought in wholesale), I usually buy the ingredients like the palm and tallow oils, caustic soda, and Sodium Silicate in small quantities to produce a few cartons of soap, then I go out and sell, get back the capital, then buy more materials.
As mentioned above, this is a big disadvantage for me because I am buying ingredients at retail prices since I can’t afford to buy in bulk. I also end up spending more in terms of transport costs and time wasted to be going to the market every few days.
I, therefore, need your financial support to purchase more raw materials to increase my soap production capacity hence make more profit.
The loan will go towards the purchase of 18.5kg of Sodium Hydroxide (Caustic Soda), a drum of palm oil and 20kg of Tallow oil all which have currently run out of, then the remaining amount I can buy a few bottles of additives (color and fragrance).

Feedback

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Project Info

Project Type

Pay It Forward

Disbursed amount

$70.00

Date disbursed

May 24, 2023

Backers

Vincent

Nairobi, Kenya

Michael

Nairobi, Kenya

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