Increase my raw materials inventory for my soap business

Entrepreneur

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

The cost of soap raw materials has in the recent past gone high in Kenya and presumably within the region. The increased cost of raw materials and subsequently some scarcity of the same has caused some challenges in my soap-making venture. However, I am still determined to keep my customers happy by ensuring they do not miss the products they have come to love. It is for this reason I am seeking further funding to increase my inventory of raw materials so I can keep the production going.
The loan will go towards the purchase of 50kg of Sodium Hydroxide (Caustic Soda), a drum of palm oil, and 30kg of Tallow oil all of which have currently run out of, then the remaining amount I can buy a few bottles of additives (color and fragrance) and also clear some wages for my handyman. Whatever amount remains, I intend to plough it back into the business so I can keep growing and hopefully be in a better position to automate my processes.

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