The business idea is for making and marketing of leather sandals. It is premised on production of 18,200 Leather Sandals per month which translates into 218,400 Sandals per year. The revenue potential is estimated at US $ 50,960 per month which translates into US $ 611,520 per year. This project cost is US $ 10,150.
After the tannery process, different layers of skins and hides are put together to make shoe soles, another piece is cut that will make the strings of the shoe. The two pieces are then inter-joined by use of either glue or sewing machine. The two are finally taken for smoothening more especially at the edges.
Capital Investment Requirements in US $
|Heavy Duty sewing machine||No.||1||5,000||5,000|
|TC of Machinery||10,150|
Production and operating costs in US$ Direct Materials, Supplies and costs
|Cost Item||Units||Unit Cost/ day||Qty/ day||Prod. cost/ day||Prod. Cost/ month||Prod. Cost/ year|
|skins and hides||Kgs||1||150||150||3,900||46,800|
General costs (Overheads)
|Depreciation (Assets write off) Expenses||211.46||2,538|
|Total Operating Cost||5,051.5||60,618|
- Production costs assumed 312 days per year with a daily capacity of 800 Leather Sandals.
- Depreciation (fixed assets write off) assumes 4 years life of assets write off of 25% per year for all assets.
- Direct costs include materials, supplies and other costs that directly go into production of the product.
Project Product Cost and Price Structure In US $
|Item||Qty/ day||Qty /yr||@||Prod. Cost /yr||UPx||TR|
Profitability Analysis in US $
|Profitability item||per day||per month||per year|
|Less: Prodn& Operating Costs||194.28686||5,051||60,618|
Government Incentives Available
Government is encouraging small scale businesses and income generating activities to eradicate poverty through “Bonna Bagagawale Programme”.
There is an ever-increasing demand for leather products processed from skins and hides.
Availability of Raw Materials and Equipment
Raw Materials (skins and hides) can be got from Ankole and Karamoja regions in Uganda, and equipment can be obtained from the local market.
This business associated with risks of stiff competion from other manufacturers thus need for employing better mixing strategies like Price, place among others.