Case: Business plan development training in Ghana

 

Client: Tropenbos International (www.tropenbos.org) 

It is estimated that over 80% of wood sourcing in Ghana happens illegally. The cause of most illegal chainsaw milling is economic: families without opportunities for formal employment resort to illegal chainsaw milling as a source of income. As this happens unregulated, the chainsaw milling takes place without regard for sustainability, causing large-scale deforestation in Ghana.

Tropenbos International aims to stimulate the business development of sustainably sourced wood products. The benefit of such businesses is twofold: on the one hand, it provides employment opportunities for illegal chainsaw millers, thereby reducing deforestation. On the other hand, it offers a certified sustainable source of wood to companies who otherwise (unwittingly) would have bought illegally sourced wood.

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Sustainable logging (Source: Tropenbos.org)

In specific, Tropenbos supports the following three businesses models:

  • Agro-forestry plantation on degraded forest land
  • Charcoal production from sustainably managed woodlots
  • Artisanal milling from legally sourced wood

Although these businesses do sporadically exist in Ghana, they lack the skills in business planning to grow in a market dominated by illegally sourced wood products. In fact, this environment provides very little opportunity for an economically sustainable business. Illegal chainsaw millers avoid many costs related to sustainability, such as fees to the Ghana Forestry Commission and transport from legal plantations to production site. Moreover, their business model avoids taxes, interest cost, and overhead cost. Altogether, the illegal chainsaw millers determine a very low market price for wood products, which makes it difficult for a professional and sustainable business to be competitive.

As a solution, Sense was contracted to provide training to develop the necessary business planning skills. The three businesses each signed up two participants to the programme, complemented by two representatives of Tropenbos connected to each business. The training method was to learn by doing: Sense introduced the participants to templates for a business plan and model and guided them through the process of making their own. Moreover, the training was geared to be training for trainers at the same time, to allow the Tropenbos representatives to run the same workshop independently. Having completed the training, the participants would have compiled an expert business plan, allowing them to acquire finance, and the necessary competency to execute it.

The training took place in three parts. Firstly, Sense provided a 5-day workshop on location in which it introduced different elements of a business plan and assisted the participants in writing them. The programme consisted of:

  • Introduction to the importance of a business plan
  • Developing a questionnaire & conducting market research in the local market
  • Obtaining information from suppliers, banks, and buyers of finished goods
  • Setting up a marketing plan
  • Developing a financial plan and introduction to the various elements (cash flow, P&L, balance sheet)
  • Writing skills training: short and concise sentences, introduction and executive summary

As anticipated, not all the information required for the business plans could be obtained during the 5-day workshop. The second part of the training, therefore, consisted of the participants finding the remaining information and finishing the business plan, while Sense was available for guidance and advice. The guidance applied Sense’s key competencies: Working together with the participants to gather the right inputs, Sense used its trademark business model to provide detailed forecasts of each business’ production schedule, cash flow, profit and loss statement, and balance sheet. Using the outcomes of the models, Sense gave recommendations to each business to ensure their plan was economically viable. The outcome of the training was a draft business plan for each of the participant groups.

Sense ran the third and final part of the training on site again. Together with the participants, the business plans were evaluated and concluded. Having developed a professional business plan, each participant group was now fully prepared to venture out, acquire the necessary finance, and run a sustainable and profitable business.

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Artisanal Milling (Source: tropenbos.org)