Tuesday, June 21, 2011

June 21, 2011 - Business Plan

Kristoffer and I (ok, mostly Kristoffer) have decided to become venture capitalists in Kenya. Well, I suppose "venture capitalists" is a bit of stretch, but we are investing money to help Charles and his nephew start a business. The story is this:

In his work with WFP, Kristoffer has been involved with the stove market in Kenya. Kenyans traditionally cook on three-stone open fires (as in, they put a big pot on top of three stones with wood burning beneath it); this is very inefficient and requires a lot of firewood, which significantly contributes to deforestation in Kenya. Additionally, the smoke from cooking this way is bad for the health of the women who use them to cook. Called a "jiko" in Swahili, the wood-burning stoves that Kristoffer helps provides to schools are designed to be healthier and way more efficient. In addition to the institutional-size stoves that WFP purchases for schools, there are also similar household-size stoves for individuals and families to use. These stoves are really impressive, but many Kenyans would find them to be expensive and also not available everywhere. Kristoffer works with one stove supplier in particular and discovered that they do not have distributors in the part of Kenya where Charles lives. To continue our efforts to provide sustainable help to Charles and his family, we have given him a certain amount of money to buy stoves to distribute where his family lives.

Charles, already a fan of these stoves because we have given his family a couple of them, was very eager when Kristoffer approached him with this idea. Charles has had several meetings with the stove supplier and had to sign a legal contract to become a distributor for them. His company, which will eventually be licensed with the government, is called Ukambani Stove Distribution Ltd. Kristoffer and I made a spreadsheet for Charles (because we gave him an old laptop and a book to learn how to use Excel) to keep track of the stoves and the money. We aren't looking to profit from this, just to get back our initial investment. Charles and his nephew, Steve, will sell the stoves to Charles' neighbors in Nairobi and all around his home town, Machakos, for a decent profit equivalent to several dollars. That money will be used to slowly pay back our investment, to pay Steve a salary, to buy more stoves, and hopefully to save.

Given the interest in these stoves and the fact that Charles will be the sole distributor in a very populated area, we think he can make quite a bit of money from this venture, which we hope he will use wisely to continue the business and also to save for his family's future. We know he has a dream to own a car, which is the ultimate symbol of wealth here, so perhaps he could start saving for that. He picked up his first order of stoves one week ago and has sold three of them so far. Additionally, he gave a demonstration at his church this weekend and got seven orders. One of the stoves sold so far is a fancier, more expensive version; Steve sold it to a woman for a little bit less than he wanted to, but I assured Charles that was a good investment if she tells everyone she knows about these honest, hardworking guys who are selling long-lasting, energy-efficient stoves.

Kristoffer provided all the contacts for Charles and all the knowledge about the stoves (selling points for Charles and Steve to know, etc.), and I keep injecting tidbits of advice, like "Once you have the minimum requirement, open a bank account so you don't spend all your profit or get robbed!" It actually turns out that Charles has a little bit of sales experience from when he was younger and is also teaching Steve how to be a salesman. When Charles doesn't need to be driving us anywhere, usually in the afternoon when the kids are napping, he is allowed to drive to the stove supplier for meetings or to pick up stoves. So far it is going well and he is THRILLED. To say the least. We think it is fun to teach him a little bit about business and economics, and Kristoffer is eager to see how quickly the stove is embraced in Charles' community.

By the time we leave Kenya, whenever that may be, we will have funded an education for Charles' wife to become an employed school teacher; have bought his family goats, thanks to my parents, that can be bred and used for milk, meat or to sell; have provided his family with an enormous water tank to harvest water so his mother doesn't have walk up and down hills for miles to fetch it; have provided his family with solar panels so they can have some electricity in their home; and we will have helped Charles start a successful (we hope) business that he can continue long after we leave. It is all about building capacity and providing sustainable development solutions, and I feel proud that we've done our best to help improve the quality of life for one Kenyan family.

We have learned in our time here that the best way to help people in the long run - and I believe this applies everywhere, actually - is to give them tools to help themselves. Our experience has shown us that, while that theory sounds quite simple, figuring out how to actually provide that kind of help is extremely complicated in practice.

We'll keep you posted ;)

1 comment:

david reber said...

How is the business going?