Introduction
This business idea is production and marketing of rubber bands. A rubber band is a short length of rubber and latex formed in the shape of a loop. They come in multiple colors. Such bands are typically used to hold multiple objects together. Rubber bands are elastic in nature and are extensively used for a variety of purposes in offices, shops and banks. Its establishment capital operational annual cost is modest at about US$ 45,501 per year, Potential revenue is estimated at US$70,200 per year and the production capacity is 80 bundles per day.
Production Process
Latex is prepared by using stabilizers and pigments through the normal dipping method. With the help of moulds, through dipping and vulcanizing, rubber tubes are prepared. These are used to prepare rubber bands in different sizes, colours and widths.
Capital Investment Requirements in US$
| Capital investment item | Units | Qty | @ | Amount |
|---|---|---|---|---|
| Rubber band cutting machine | No. | 2 | 400 | 800 |
| Wooden moulds | No. | 3 | 100 | 300 |
| Ball mill | No. | 1 | 210 | 210 |
| Packing materials(kg) | No. | 10 | 30 | 300 |
| TC on machinery | 1,610 |
Production and Operating Costs in US$
| Cost Item | Units | @/ day | Qty/ day | Pdn cost/ day | Pdn cost/ month | Pdn cost/ year |
|---|---|---|---|---|---|---|
| Rubber pigments | Sheets | 38 | 3 | 114 | 2,964 | 35,568 |
| Sub-total | 3 | 114 | 2,964 | 35,568 |
General costs(overheads)
| Utilities(water and power) | 100 | 1,200 |
|---|---|---|
| Labour | 100 | 1,200 |
| Rent | 150 | 1,800 |
| Miscellaneous costs | 50 | 600 |
| Distribution costs | 260 | 3,120 |
| Depreciation(Asset write off)Expenses) | 33.5 | 402.5 |
| Sub -total | 693.5 | 8,323 |
| Total Operating Costs | 3,658 | 43,891 |
- Production costs assumed 312 days per year with a daily capacity of 250 bundles of rubber bands.
- Depreciation (fixed assets write off) assumes 4 years life of assets written off at 25% per year for all assets
- Direct costs include materials, supplies and other costs that directly go into production of the product.
Project Product Costs and Price Structure in US $
| Item | Qty/ day | Qty/ yr | @ | Pdn cost /yr | UPx | TR |
| Rubber Bands | 250 | 78,000 | 0.56 | 43,891 | 0.9 | 70,200 |
Profitability Analysis in US$
| Profitability Item | Per day | Per month | Per Year |
|---|---|---|---|
| Revenue | 225 | 5,850 | 70,200 |
| Less production and operating Costs | 140.67 | 3,658 | 43,891 |
| Profits | 84.33 | 2,192 | 26,310 |
Market Analysis
Rubber bands have steady demand in the market. Financial institutions are the major users but trading community and others such as school, shop keeper etc use substantial amounts too.
Source of raw materials and equipments
Raw materials like rubber can be imported from Congo Free State, Ghana and Liberia while equipments can be sourced from China.
Government facilities and Incentives
The government is encouraging the establishments of industries at all levels to create employment. These are soft loans with various financial institutions coupled with advisory service and subsidies.
