Professional Documents
Culture Documents
Model Business Plans For Micro Off-Farm Activities
Model Business Plans For Micro Off-Farm Activities
ACRONYMS
Cover photo: Ethiopian women selling dried chili peppers. Photo: Oscar Espinosa/iStock
MODEL BUSINESS PLANS FOR
SELECTED OFF-FARM ACTIVITIES
These model business plans provide a simple cost–benefit analysis that shows new entrants
what investing in a new off-farm small business entails. The SWOT analysis—covering strengths,
weaknesses, opportunities and threats—distills the main findings of the value chain analysis that
are pertinent to small business operators. The financial analyses (costs, revenue, gross profit and
gross margin) are based on the information gathered from business operators and local government
experts through focus group discussions and key informant interviews.
Behavior change
Greater urbanization and connectivity mean people take part in activities that are aspirational
(personal care, fashion). More rural people are buying prepared food and consumer goods.
They are also substituting modern items for traditional ones.
Government expansion
Expansion of government institutions (schools, clinics, etc) into rural areas is
increasing demand for construction and woodwork (for facilities and staff homes),
and is bringing employees who become consumers of local goods and services.
Government focus
The manufacturing and construction sectors have received special
government attention in terms of training, provision of premises and credit access.
The focus is slowly expanding beyond urban areas.
Increased income
Increased income, mainly of daily laborers and
farmers, is boosting demand for prepared food,
consumer goods and services.
Baltina agro-processing
Poor market
linkages Limited or no linkages
to individual or institutional
customers
in larger markets. Construction
Corruption
Corrupt bidding processes
restrict access. $ Woodwork
Hairdresser
Lack of infrastructure
Limited or no access to electricity
and water limits type and scale of Weaving
business that can be operated.
Competition
Competition from motorized
Sisal rope production
transportation such as motorbikes
and Bajaj three-wheelers.
Animal exploitation
Animal-drawn carts
Poor hygiene and sanitation
Challenges common to most*
Limited food safety knowledge.
small off-farm businesses
Food is exposed to dust, sunlight,
* Lack of premises does not apply to animal-drawn carts and construction.
flies and germs. There is limited
Lack of credit access
water for washing hands and
Limited initial and working capital due to
lack of access to credit from formal financial
utensils.
institutions due to lack of collateral.
Lack of skills
Lack of technical, financial literacy
and entrepreneurial skills limits scope
and quality of business.
Cultural constraints
A belief that women and girls should be
Seasonality confined to household chores limits
Availability of work fluctuates their participation in businesses.
according to the seasons.
Lack of access to premises
Limited availability and prohibitive cost
of premises limit establishment and
expansion of businesses.
Climate-related shocks
? Shocks that reduce harvests affect almost
all activities either directly or indirectly.
Health problems Directly because certain raw materials/
Juice from sisal leaves is a skin ingredients may not be available (supply),
irritant and causes itching. and indirectly because farmers—one of the
main consumer groups—have less disposable
Lack of land income to spend (demand).
Lack of land available for
large-scale sisal production.
Overview: In small towns, peri-urban areas and villages, diverse food catering businesses
are on the increase due to rural-urban migration and the expansion of
government facilities (such as schools, TVET institutions, farmers’ training
centers, health centers, etc.), whose employees increase the demand for food
and other consumer goods.
Operators: Youth (male and female) in jointly owned small businesses, and women individually.
Overview: In small towns, peri-urban areas and villages, retail shops supply a variety of
consumer goods to the rural population, mainly those who cannot access
larger markets due to distance, poor infrastructure and the absence of
appropriate transportation services. E.g., pregnant women, children and the
elderly.
Operators: Youth (male and female) mainly in joint small businesses, and young men or
women in individually owned businesses.
(Potential) customers: Government employees, daily laborers (mainly migrants), farmers from
rural areas on market days, other inhabitants of towns and villages,
commuters, etc.
Overview: In the rural, peri-urban and urban areas of Arsi Negele, Boset, Shala and
Siraro, raw peppers are processed into a variety of food items known
collectively as baltina.
(Potential) customers: Farmers mainly on market days, urban inhabitants, hotels and food catering shops.
Overview: The topography of the Rift Valley is suitable for animal-drawn carts. They
transport people and goods from rural areas to urban centers, mainly on
market days. The carts are also used to transport crops during harvest, as
well as farm inputs and water.
Operators: Males (youth and adult) as the activities require some physical strength.
Sometimes women operate donkey carts to fetch water as these are
relatively small compared to horse carts.
(Potential) customers: Local inhabitants who want to visit urban centers, transport goods to
market in urban areas, or take their harvest from farm to home.
Overview: Woodwork businesses require electricity and hence are located in large
towns like Ziway, Arsi Negele, Shashamane, Aje, Dera, etc. The special
skills needed are acquired through training or long experience. The
businesses are skills-intensive and the operators need physical strength.
Operators: Educated and/or experienced men and youth (male, as the activities require
some physical strength). Owners can be youth, men and women.
(Potential) customers: Private individuals and government institutions (schools, health centers,
homes for teachers, health and agricultural extension workers, etc.)
Overview: In East Hararghe, women collect wild sisal leaves using traditional hand
tools, and separate the fibers from the leaves to make rope.
Operators: Women and girls who collect sisal leaves and produce ropes to sell to
traders in local markets.
(Potential) customers: Khat traders in Aweday, Haramaya, Harar, Dire Dawa, etc.
Overview: In urban centers with access to electric power, hairdressers for both
men and women are key small-scale businesses. In rural areas and
small
towns without electricity, due to the high demand for personal care, some
entrepreneurs have bought small generators to run hairdressing businesses.
Operators: Educated and/or experienced women and youth (male and female).
(Potential) customers: Youth (male and female) and women and men living nearby or those who
come to town on market days.
Overview: In small towns, peri-urban areas and villages of Dire Dawa, Deder and Malka
Balo, there are growing numbers of small and medium-sized bakery businesses
due to rural-urban migration and the expansion of government centers,
whose workers have increased demand for baked goods. Increasing numbers
of tea houses and small food catering shops have also boosted demand.
Operators: Mostly better-off adult men, as women and youth cannot raise the
required initial capital.
(Potential) customers: Households (for home consumption); shops (for retailing); cafes,
restaurants and tea houses (for bread to sell with tea).
Overview: Weavers are found in most villages and peri-urban areas of Deder and
Malka Balo of East Hararghe Zone. They use traditional equipment, which
they make themselves or buy from markets.
Operators: Weaving businesses are owned and operated by men who learnt the skills
from their fathers. Weavers are considered to be of a lower social status
and are relatively poor, with limited land for agricultural activities.
(Potential) customers: For better-designed, better-quality clothes, everyone in villages and urban
centers. But currently only elderly men and women in rural areas.