Business plan of the future distributor of TerraCottem in Burkina Faso

After observing us and listening very carefully to what we were saying about our meetings with various people, Martial showed himself as a potential distributor.

On several evenings he chauffered us and at Easter drove us to Bobo. He took advantage of these occassions to have a free chat about the possibilities of TerraCottem in Burkina Faso . During these conversations he showed himself very clearly to be an entrepreneur, already making all the plans to start the entreprise.

Following these discussions, he came up with the following business plan . (follow link)

As it is in reality his business plan, his investment and work, I prefered not to make any changes to it towards our usual formats and so leave it like it is.

Some parts however could necessite some explanation:

In regards to hiring, 6 employees would be hired: 5 sales and 1 chief sales personnel.

• They would all immediately be given clothing by the company in order to create a recognizable brand, and some credibility towards future clients.
• The 5 saleswomen would get a bike with bag big enough for 5 kg, their superior would receive a small motorbike.
• They would get a relatively low fixed salary, with a fixed bonus on sold goods.
• Personel cost should not rise above 10% of the sold goods.

The office would be installed, telephone line asked for and material for demonstrations bought.

Rent for the office is calculated at a small 86000 CFA/Month.

Some cost is fixed and some cost is in function of his yearly turnover, equally spread over the year. I suppose these figures derive from his prior experience. I ran through some figures with him and he confirmed them all as being realistic. What is remarkable is the very low cost of PC's.

As he is not sure about the intermediairy prices like transport and import taxes he is counting on a total price of 68% of his sale price to be a maximum for this. We will try to simulate this in the section: cost of the goods . He followed the proposed guidelines of TerraCottem NV to distinguish his salesprice. (9,55 EUR/kg or 6265 CFA/kg)

His biggest problem was the pre-financing of the first cargo he has to buy. Stefan Schippers has offered to take this for his account, via his firm B.E.E.P. cvba against a part of the profit. See Cash-flow simulations.

He counted on 4 months to sell the first 500 kg of TerraCottem. He would use also this period to lobby different important players in the market like the Municipality and Ministry of Water or Agriculture to reach his long term planning.

He would reach various bigger (test) projects after 6 months, which would mean a a much higher selling rate than in the beginning. He is very confident he will sell 10 tons of TerraCottem in the first year. In my humble opinion, but I do not have experience with the players in the market, I thought he was too pessimistic in the beginning, but too optimistic for the end of year.

To simulate what some other scenario's would bring us, I calculated some more cash-flows, with more realistic turnover figures. The biggest risk is that we do not manage to create a market quickly enough, because this will create a negative cash-flow, but worse still, a pessimistic mentality which could end the whole story.

Creating the right environment and lobbying with the Ministry of Agriculture to start doing the tests are very important to keep the market at the right momentum.

Martial asked directly for the neighbouring countries to be included in his territory, as a lot of NGO's are working on the sub-sahel area, and to prevent others gaining profit off of his energy to create this market.

Situation 1st of June 2007:

Distribution Agent for TerraCottem (Burkina Faso, Niger, Mali, Côte dIvoire, Bénin and Togo)

Société des Intrants et Produits de L'Agriculture et de l'Elevage (SIPAE)
Generale Management: Mme Kéita Néée Sawadogo Alimata (mobil : 00 226 70 24 94 96)
666 avenue du Mogho, Ouagadougou
Adresse postale : ***
Tél: 00 (226) 50 34 95 41

Dedicated employees: 3