BUSINESS IDEA FOR MAKING LEATHER SANDALS

Introduction

The business idea is for making and marketing of leather sandals. This business idea is premised on production of 18,200 Leather Sandals per month which translates into 218,400 Sandals per year. The revenue potential is estimated at US $ 45,500 per month which translates into US $ 546,000 per year. This project cost is US $ 8,150

Production

Process After the tannery process, different layers of skins and hides are put together to make shoe soles, another piece is cut that will make the strings of the shoe. The two pieces are then inter-joined by use of either glue or sewing machine. The two are finally taken for smoothening more especially at the edges.

Market Analysis

There is an ever-increasing demand for leather products processed from skins and hides.

Capital Investment Requirements in US $

Item	unit	qty	Unit cost	Total
Heavy Duty sewing machine	No	1	4,000	4,000
Smoother machine	No	1	900	900
Cutting tools	No	5	150	750
Delivery van	No	1	2,500	2,500
Total cost of Machinery				8,150

 

Production and operating costs in US$ Direct Materials, Supplies and costs

Cost Item	Units	Unit Cos t/ da	Qty/ day	Prod. cost/ day	Prod. Cost/ mont h	Prod. Cost/y ear
skins and hides	Kgs	1	150	150	3,900	46,800
Glue	rams	1.5	10	15	390	4,680
Sub-total					4,290	51,480

 

General costs (Overheads)	Prod. Cost/ month	Prod. Cost/y ear
Utilities (power)	75	900
Utilities (water)	20	240
Salaries	250	3,000
Rent	100	1,200
Depreciation (Assets write off) Expenses	170	2,038
Sub-total	615	7,378
Total Operating Cost	4,905	58,858

 

Production costs assumed 312 days per year with a daily capacity of 800 Leather Sandals. Depreciation (fixed assets write off) assumes 4 years life of assets write off of 25% per year for all assets.

Direct costs include materials, supplies and other costs that directly go into production of the product.

Project Product Cost and Price Structure In US $

Item	Qty/day	Qty/yr	Unit cost	Prod. Cost/yr	Unit price	Total revenue
Leather sandals	700	218,400	0.3	58,858	2.5	546,000

 

Profitability Analysis in US $

Profitability item	per day	per month	per year
Revenue
Leather sandals	1,750	45,500	546,000
Less Prod & Operating Costs	189	4,905	58,858
Profit	1,561	40,595	487,143

 

Source of Supply of Raw Materials and Equipment

Raw Materials (skins and hides) can be got from all over regions in East Africa, and equipment can be obtained from the local market.