With only one month left in Tabora, I wanted to write a farewell post summarizing the last few months, especially highlighting our progress in January, our most successful since I arrived. In January we almost doubled our profit from December and had our highest revenue ever. January revenue was over TZS 2,400,000, costs around TZS 1,400,000, and profit TZS 1,000,000. In addition to January’s success, the business has achieved relatively consistent revenue and profit in the past seven months. As the graph below demonstrates, revenue from July to December 2015 stayed between TZS 1.2 million and TZS 1.6 million, while profit (except for August) stayed in the range of TZS 350,000 to TZS 600,000. Consistency in profit is difficult to attain because input costs fluctuate dependent on the season, altering the profit margins for each product which creates risk within he business.
Despite the consistent performance, there are a few aspects of the Tabora business that are still fragile. First among the business’s weak points is its checks and balances system. Each Partner has her own bookkeeping responsibilities, summarized in the following table.
On paper the checks and balances system is relatively simple. But in practice the Partners’ due diligence often falls short. I frequently will find small mathematical errors in Mama Tabia’s sales book, which can trickle down and create issues with our buyer’s debts. There is a lot of room for human error, which is why this system has required so much oversight by me and by Ground Team up to this point. However, in order to guarantee small errors do not occur, this checks and balance system is crucial for business’ success.
Another weak point of the business has been aligning production with buyer demand. On one hand, we don’t want to overproduce, driving up costs and keeping too high an inventory since our products are perishable. Yet on the other hand, we don’t want to produce too little and lose out on a revenue opportunity in case a large order comes in. Up to now our production schedule has been set week by week on Mondays. But Mama Tabia often receives calls later in the week from buyers demanding products, and we wouldn’t have enough inputs to fill every order. It was stressful for the Partners. They would want to carry out the sale, especially if it was a slow week, but normally we would not have enough supplies, and we’d lose the order.
A major part of this juggling act involves the reality that transporting inputs and finished products is expensive. For the past few months we have tried to reduce our transportation costs but no system has worked that well thus far. Hesitant to overspend on supplies, we found ourselves buying too little and running out early. We’d then purchase inputs mid-week because we didn’t have enough in our inventory, but we’d take a hit on the extra transportation costs, reducing profit. We needed to find a system that would allow us to consistently buy inputs, minimizing transportation costs, while also allowing for the flexibility of buyer demand. Our new production schedule was designed to tackle both these problems.
I am confident that the Tabora Business will be a successful, self-sustaining business. I have seen my partners work tirelessly to make the business work. They have shown more enthusiasm in recent weeks than at any other time since I arrived in August. The dedication is there; the human capital is there. Now it is a matter of consistency, diligence and working together.The intent of the plan displayed above is to standardize the number of bags we cook each week. The numbers are based on previous months averages, and Week 4 gives the business some flexibility for months that are more or less busy than the average.