LCSA Ziweto Blog Entry Number One
December 5, 2016
On Tuesday, November 15, 2016 we held our first conference call with Victor, Lori, and Bill to catch up on Victor’s progress with Ziweto. At the SSFI Roundtable Accelerator, Victor identified several key critical issues for Ziweto, and the groups came up with an action plan for him and Lori to address these issues.
Critical Issue Number One: Unit sales and profitability
One of the issues that Victor identified as crucial is how to quickly increase sales and profitability of current units. Currently, Ziweto consists of four franchise units and one central unit, which is operating as the point of distribution for the franchises. Victor’s plan was to identify items to help diversify the product range available in each shop. This short video explains Victor’s vision and operational plan for Ziweto.
So far, Victor has identified five new suppliers, including a seed company and a feed company. He is currently negotiating an agreement to begin selling these items in the Ziweto Agrovet shops. By expanding and diversifying their offerings, Ziweto can better meet the retail needs of their communities and increase their opportunities for profit.
Critical Issue Number Two: Capital and Expansion
Ziweto requires an investment of $200,000 to implement its expansion plan aimed at reaching 21 Agrovet shops and serving 100,000 smallholder farmers by the end of 2018. Victor has made contact with Visionfund, a subsidiary of World Vision, a nonprofit Christian organization dedicated to providing financial services to develop meaningful programs for social change, predominately in poor, rural areas. Victor is currently working on an application to obtain at least $10,000 from Vision Fund which will be enough to set one new Agrovet unit. Additionally, Victor shared that Ziweto won the SEED Africa Award for Sustainable Agriculture in 2015. This initiative support of eco-enterprises provides funding for locally-driven, innovative solutions to sustainable development challenges. Victor hopes to receive this prize money in January and has plans to use it toward strengthening his institutional set-up.
In addition to the VisionFund application, Victor identified a unique opportunity with the Malawi Innovation Challenge Fund. This organization provides grant finance for private-sector innovations with impact in the fields of logistics, manufacturing, and agribusiness. He has submitted an initial application, which was accepted and is being considered for a grant to develop a vaccine production unit.
This unique opportunity may shift some of Ziweto’s objectives. If Victor’s proposal is accepted and the amount is awarded, the Ziweto mission will expand to internalizing part of its supply chain and manufacturing an essential chicken vaccine in-house. Ziweto could then use its existing franchises for distribution, as well as develop the new franchises aligned with its expansion plan. Victor put together a proposal package that showed the impact Ziweto has been able to make with just the five existing Agrovet shops. Victor also included evidence of the successful partnerships he is developing with Fledge LLC, a Seattle based start-up incubator, and described this current Living Case Study program and mentorship through the International Franchise Association as evidence of his capacity for expansion. Victor has collected support letters from partners and bankers he has worked with thus far, and Lori is planning to help by reviewing both the proposal package and implementation plan.
Another new opportunity for expansion has presented itself in the short time since the SSFI Roundtable Accelerator. Now, Victor is in initial conversations with a sole-distributor of veterinary products from Europe Holland in Malawi. The company is a main source of products sold through Ziweto Agrovet Shops. The owner has plans to relocate to Tanzania, which is his home country, and expressed admiration of the Ziweto Agrovet Shop model and offered to sell his current stock and trading licenses to Ziweto. This is expected to improve the supply chain in Ziweto Agrovet Shops and reduce prices offered to farmers, as Ziweto will now be able to directly order these products. This opportunity would also shift some of Ziweto’s issues and attentions.
During the call, Lori asked Victor to explain what the acquisition would look like for Ziweto’s operations. The company that Victor is considering acquiring, valued at approximately $75,000 USD, currently consists of one shop operating as wholesale and retail, with seven current employees. If the acquisition goes through, Ziweto would take over the ownership and management of that shop, and combine the existing wholesale and retail business with his central Agrovet location.
Victor walked us though his process of testing different options for this possibility, including taking over management of the shop and making payments; or having the current owner as a shareholder in that location as he comes up with the financial investment. Lori agreed that this has potential for financial sustainability, and applauded Victor’s analysis of contingencies.
Critical Issue Number Three: Operating Procedures
The third critical issue that Victor identified was the need for a formalized plan for developing and communicating effective operating procedures. While the Ziweto group had very little time to discuss this topic at the SSFI Roundtable Accelerator, it resurfaced on the catch-up call. Victor asked Lori for help in developing documentation for Ziweto.
There are some existing manuals and franchise agreements, but Victor believes that now is the time to review and enrich them. It is especially important to have robust and comprehensive documentation in place prior to significant expansion or entering into new partnerships. Lori agreed, and offered to send Victor copies of operations manuals for US franchise retailers. By reviewing several different types of agreements, Victor can pinpoint what is useful and relevant, and under Lori’s guidance develop a more formalized set of documentation.
Victor has plans to review the franchise agreements and operating manuals, continue looking into the opportunity for the acquisition, and work with Lori on the proposal for the Malawi Innovation Challenge Fund. Additionally, Victor has been in touch with Dr. Late’Lawson-Lartego, the Senior Director of Food and Nutrition Security with CARE Humanitarian Agency. The two met at the SSFI Roundtable Accelerator, and Victor hopes that Dr. Late’s connections can help to uncover additional funding opportunities for Ziweto. Overall, Lori was quite impressed with Victor’s progress. Given the parameters and action items developed at the SSFI Roundtable, it appears that Victor is making great headway on the first three critical issues.
Read the next Ziweto Blog Post here