Hi all, i will use my loan to purchase an additional bag of tea for input. thank you

Entrepreneur

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

I am going to use the current loan in buying more input stock. I will be able to buy one bag of tea for input purpose. I am looking foward to access higher loans so as to buy more complete input batches in the future and meet the rising demand. For now, i will use my profits plus the loan to buy one more input batch. I will use my savings and profits to repay the loan in time. Thank you for your support

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