To purchase additional varieties of tea for tea-packing business

Martin Karanja

Limuru, Kenya

13% repaid

Entrepreneur

Name

Martin Karanja

Member since

February 2014

On-time repayments

136 installments  •  25%

About Me

I am 25 years old. In my family, I am the eldest and I have three younger brothers. One of them is in secondary school and the other two are in primary school. My parents lives in Ngarariga, Limuru, where they have a tea-packing business. I also live there and have recently started my own tea-packing business.

I completed Ngenia Secondary School located in Limuru in 2007. Then, I stayed at home helping my parents with the tea-packing business until May 2009. In June 2009, my parents supported me in getting a certificate in Human Resource Management at Kenya Institute of Management. The certificate level took me only one year to complete. But after completing the certificate level in April 2010, my parents were unable to pay for my diploma. So I decided to go back to tea-packing business.

The tea-packing business requires certain hands-on skills. Due to my prior experience, I was quickly employed by Vema (Veronicah and Martin), a small tea packing business located in Limuru. Vema is owned by the Veronicah and Martin family and employs more than 30 employees at a given time. The Vema employees have developed a union, where each of them contributes a minimum of Kshs 1,000 every month. The money is invested in different ways and generates interest for the members over a period of time. Also, with three guarantors, every member is allowed to get a loan that is equal to 2x his or her savings. I worked in the company until August 2013. By then, I had managed to make my savings of Kshs. 26,000 in the group. So, I decided to seek a loan and to start my own tea-packing business. I was given a loan of Kshs. 52,000.

While eventually, I plan to open my own business, I have currently started the business as a branch of my parents’ business. This helped to reduce amount of capital needed for registration with government authorities. Today, I employ two tea packers. I find a market for my product while my workers carry out the task of packing the tea.

Since I had to quit from Vema Company, I was given only 6 months to clear the Kshs 52,000 loan with the company’s union. With the support of my business, I was able to clear the loan of Kshs 52,000 and in turn, the Union gave back my savings and interest amounting to Kshs 33,755. That amount has helped to support my business in terms of adding inventory as the market for my products continues to expand. Currently, I use 40% of my earnings in supporting personal expenses and the rest in supporting my business.

My Business

My source of income currently is my business, which I am trying to support. Typically, I buy several varieties of tea leaves from different companies. Some of the well known varieties are KTDA, Ngorongo, Karirana, Kakuzi, and Mabrouke. Different types of teas have different prices and have different qualities. I mix different varieties to get one product that will be accepted by buyers and at the same time, that will give me adequate profit. My customers make orders and together with my two workers, we prepare the packed tea. I sell to wholesalers in different parts of the country, who then sell to retailers or to consumers. The tea product is packed in papers of 15 grams, 25 grams, 50 grams, 100 grams, 250 grams, and 500 grams. The small packages are packed in cartons, each of which contains 10 kilograms. The tea bears the label “Premium Highland Tea,” since this is the company registered by my parents.

My customers bargain different prices but I manage get a revenue of $11.59-$13.90 per carton. Currently, I sell an average of 96 cartons per month to different customers. There are many expenses related to marketing, delivering to the customer, paying salary for my workers, packing papers, purchasing cartons, paying rent, and purchasing glue. On average, my expenses, without including salary for the two workers and the cost of buying unpacked tea, add up to Kshs 18,500 per month. The workers are paid according to the number of cartons completed (each carton is paid Kshs 150). So, if I make 96 cartons, my total expenses (without including the cost of buying unpacked tea) are around $214.42. KTDA (90Kg bag) of tea currently costs Kshs $144.879, Ngorongo costs $129.8, Karirana costs $92.72, Mabrouke costs $81.13 and Kakuzi costs $57.95. A mixture containing of the 5 varieties gives 45 cartons with some cases of slight difference. So, to sell 90 kilograms, I have to make two mixes. If I manage to sell 96 cartons at an average of 1000 per carton carton, I get a net profit of $224.852. But the profit may rise in cases where I sell at higher prices.

My business is a low-risk business since my product has a market and demand. In short, almost every family in Kenya and neighboring countries buys tea. Also, the product takes more than one year to expire, unless it is contaminated with water. The product is on demand throughout the year. My biggest challenge is that due to my low level of liquidity, I am not able to sell the tea to many buyers who offer to purchase many cartons on credit. I concentrate on those who buy in cash. Also, I have a problem in buying a third mix. With the increasing demand, it is apparent to me that I have to make three mixes per month. But in most cases, I am challenged as I wait for payment from customers after delivery, which may take time (days in some cases) to process. Thus, I am asking for assistance to raise more capital so that my business can become stable. I also intend to expand my own business and not work under the registration of my parents. My business is already past breakeven point and thus, I am sure that I will be able to raise money to repay the loan. My business expansion will play a great role in loan repayment. I will be quite grateful for the support of my lenders.

Loan Proposal

Thank you lenders for my prior loan, which I fully repaid and made payments for on time throughout the life of the loan. The demand for tea has always been high here and many retail buyers want to buy tea on credit. However, due to the low level of liquidity of my business, I currently can only sell to those who buy on cash basis. The loan of $488.172 will help me increase my stock so that I can also sell to those buyers who buy on credit. With that loan, I expect my business monthly revenue to rise by around $579.515 and monthly profit by $115.903.

My business is unique in that it requires training in hands-on skills called 'jua kali,' which is gained through hard work. We do not use machines, yet we compete well with companies that use machines. In fact, due to personal touch that we add to our business, we have a strong competitive edge. As you can see in my pictures, we use rectangular blocks of wood to make the shapes of papers in which we put tea. My business is thus competetive because only a small number of people have good skills to make the perfect product that customers want. Currently, I have two workers but the loan will help me hire and train one more worker and more in the future.

I appreciate the fact that the last loan enabled my business to become more stable and that is why I have been repaying the loan over the period I promised without any struggle, even without rescheduling down. I also promise to complete this loan faithfully without even rescheduling down. I will appreciate your ultimate support - I'm a young hardworking Kenyan who would like to have a bighter future and break out of poverty.

Show original English  

About Me

I am 25 years old. I am the eldest in our family. I have three younger brothers. One of them is in Secondary school but the other two are in primary school. My father and mother live in Ngarariga, Limuru. They carry out a tea-packing business. I also live there and I have recently started my own tea-packing business.
I completed Ngenia Secondary School located in Limuru in 2007. I stayed at home helping my parents with the tea-packing business until May, 2009. In June, 2009, My parents decided to support me to do certificate in Human Resource Management at Kenya Institute of Management. The certificate level took me only one year to complete. After completing the certificate level in April 2010, my parents were unable to pay for my Diploma. I decided to go back to tea-packing business, which requires certain hands-skills to do. Due to my prior experience, I was quickly employed by Vema (Veronicah and Martin), a small tea packing business located in Limuru.
Vema is owned by one family of Veronicah and Martin but at any one time, they have more than 30 employees. The employees in the company have developed a union where every one of them contributes a minimum of Kshs 1000 every month. The money has been invested in different ways and has been generating interest to the members for a long time. With three guarantors, every member is allowed to get a loan that is equal to 2 times his or her savings. I worked in the company until August 2013. By then, I had managed to make my savings of Kshs. 26,000 in the group. So, I decided to seek a lone and to start my own tea-packing business. I was given a loan of Kshs. 52,000. My intention was to start the business as a branch of my parents’ business. This would help to reduce amount of capital needed for registration with government authorities. Eventually, I managed to open my business and today, I have employed two tea packers. My task in the business is to seek market for my product as my workers carry out the task of packing the tea.
Since I had to quite from Vema Company, I was given only 6 months to clear with the company’s union. With the support of my business, I have cleared the loan of Kshs 52,000 and in turn, the Union has given back my savings and interest amounting to Kshs 33,755. That amount has really helped to support my business in terms of adding stock as the market for my products continues to expand. Currently, I use 40% of my earnings in supporting personal expenses and the rest in supporting my business.

My Business

My source of income currently is my business, which I am trying to support. I buy several varieties of tea leaves from different companies that are of different varieties. Some of the well known varieties are KTDA, Ngorongo, Karirana, Kakuzi and Mabrouke. The different varieties cost different prices and have different qualities. I mix the different varieties to get one product that will be accepted by buyers and at the same time, that will give me adequate profit. I pack in papers of 15 grams, 25 grams, 50 grams, 100 grams, 250 grams and 500 grams. I sell to wholesalers in different parts of the country, who then sell to retailers or to consumers. My customers make orders and together with my two workers, we prepare the packed tea. The small packages are packed in cartons, each of which contains 10 likograms. The tea bears the label “Premium Highland Tea,” since this is the company registered by my parents.
My customers bargain different prices but I manage get a revenue of $11.59-$13.9 per carton. Currently, I sell an average of 96 cartons per month to different customers. There are many expenses related to marketing, delivery to the customer, salary for my workers, packing papers, cartons, rent and glue. In average, my expenses, without including salary for the two workers and the cost of buying unpacked tea, add up to Kshs ,18,500 per month. The workers are paid according to the number of cartons completed (each carton is paid Kshs 150). So, if I make 96 cartons, my total expenses (without including the cost of buying unpacked tea) are around $214.42. KTDA (90Kg bag) of tea currently costs Kshs $144.879, Ngorongo costs $129.8, Karirana costs $92.72, Mabrouke costs $81.13 and Kakuzi costs $57.95. A mixture containing of the 5 varieties gives 45 cartons with some cases of slight difference. So, to sell 90 kilograms, I have to make two mixes. If I manage to sell 96 cartons at an average of 1000 per carton carton, I get a net profit of $224.852. But the profit may rise in cases where I sell at higher prices.
My business is a low-risk business since my product has market and demand. In short, almost every family in Kenya and neighboring countries buy tea. Also, the product takes more than one year to expire, unless it is contaminated with water. The product is on demand throughout the year. My biggest challenge is that due to my low level of liquidity, I am not able to sell the tea to many buyers who offer to purchase many cartons on credit. I concentrate on those who buy in cash. Also, I have a problem in buying my third mix. With the increasing demand, it is apparent to me that I have to make three mixes per month. But in most cases, I am challenged to wait for payment from customers after delivery, which may take process and days in some cases. Thus, I am asking for assistance to raise more capital so that my business can become stable. I also intend to expand my business and to open mine and not work under the registration of my parents. My business is already past breakeven point and thus, I am sure that I will be able to raise money to repay the loan. The part of profit that I use to expand my business will play a great role in loan repayment. I will be quite grateful for the support of lenders.

Loan Proposal

Thenk you lenders for the last loan that i have repaid fully and in time throughout. The demand for tea has always been high here, but many buyers, who are retailers want to buy on credit. However, due to low level of liquidity of my business, I only sell to those who buy on cash basis. The loan of $488.172 will help me increase my stock so that I can be able to sell also to those buyers who buy on credit. With that loan, I expect my business revenue to rise by around $579.515 and profit by $115.903 a month.

My business is unique in that it requires training in hand skill called 'jua kali,' which is gained through hard work. We do not use machines, yet we compete well with companies that use machines. In fact, due to personality touch that we add to our bisiness, we develop high level of competiotive edge. As you can see in my pictures, we use rectangular blocks of wood to make the shapes of papers in which we put tea. My business is thus competetive because only a small number of people have good skills to make a perfect product that customers want. I have two workers, but the loan will help me hire and train one more worker and more in the future.

I appreciate the fact that the last loan enabled my business to become more stable and that is why I have been repaying the loan over the period i promised without any struggle, even without rescheduling down. I also promise to complete this loan faithfully without even rescheduling down. I will appreciate your ultimate support, and also please support me, as one of the young hardworking Kenyans who would like to have a bighter future, and break out of poverty.

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Loan Info

Project Type

Classic Loan

Disbursed amount

$491.06

Date disbursed

Jul 28, 2014

Repayment status

Late

Projected term

26 months

Cost to entrepreneur

Lender interest: $491.06 at 9.89% annual rate over 26 months = $106.47

Service fee: $40.42

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