A Snack is defined as a small portion of food or drink or a light meal, especially one eaten between regular meals (Dictionary.com). Snacks are one of the top selling items in any shop or supermarket in Uganda. Everyone everywhere somehow eats a snack or two daily.
In Uganda, the common snacks are ground nuts (pea nuts), Soya, Mandazi, Chapati, Simsim, Crisps, Chips (french fries), Sumbusa, pan cakes, doughnut, popcorn, gweke (fried maize), cookies among others.
The snack business is characterised by the following;
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Low entry barriers (can easily be started with few resources)
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Easily run as a home business
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Low margins
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Requires high volume sales
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Price sensitivity
If you have any remote interest in cooking, then this is one of the most obvious businesses to pursue. Before you start worrying about how to sell the product made, let us scan through the various issues that need to be addressed.
Key Considerations
To set up a snacks business it is crucial that one addresses the listed issues:
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Business Plan: Have one, however basic. This plan should be able to guide you on what you plan to produce, how you plan to sell it, anticipated trading volumes, an overview of your operating expenses, targeted sales price among others.
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Recipe: Come up with a recipe for the snacks you want to produce. This is very important since you are entering a market that is likely already flooded with similar snacks. It helps if you find a key differentiator. An example, if you chose to go into the Fried Mukene Snacks business today, the edge would be in adding some spices to your recipe that will attract customers to your product.
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Raw Materials: You definitely need to acquire raw material which will be processed to form the snacks. This raw material is key in your value chain. Ensure that you set up a steady supply of the raw material to avoid breakdowns in your production cycle. Nothing hurts customers like getting accustomed to your product and then they all of a sudden have to bear with its absence from the market for a week or so. No amount of excuses will win all of them back. You will essentially have gifted them to the competition. If you can stock the raw material to avert such instances, do so.
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Production Equipment: You’re going to have to acquire equipment necessary for the production of these snacks. Depending on the snacks in question, the equipment can be as basic as they get. Look around in your local market, talk to people already in similar business to find out where they source their equipment from or at worst, visit the upscale supermarkets and shops that deal in the high end equipment. Your pocket and planned target market is key in determining what kind of equipment you settle for.
Plastic packaging can be sealed with either the electric sealer, flat iron or candle.
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Production Location: Where do you plan to make the snacks from? This is dependent on multiple factors among which is your target market, resource availability, production expectations, type of snacks etc. There are snacks that need to be consumed within a short timeframe after production for the best customer experience like chips, rolex (chapati & egg), sumbusa or fried fish. You also have snacks that can be kept for a while and even packed like mandazi, cookies, roasted groundnuts and gweke. The longer lasting snacks can always be processed from any location, packed well and sold in entirely different locations while for the quick to eat snacks, you need to position your production facility near the customer.
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Packaging: This has to do with the way you present your product to the customer. You could choose to go it anyway you want but first assess and see how others are doing it. If you’re going to use supermarkets and shops to retail your products, you need to have decent attractive packaging in place.
Compare the two packagings. Which one gives better appeal?
If you plan to sell by the roadside, then all you need might be old newspapers in which to wrap the snacks. Align your packaging with the target market so that you avoid over or under investing in it. This has a direct impact on your sales performance.
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Branding: This is the practice of creating a unique name and image for a product in the consumer’s mind. As you set out to sell your snacks, you need to create an identity for them or else they will get lost in the multitudes of products out there. A customer should be able to know that they are buying your product and not any other. Near my home, there is a Chapati seller who branded his stall as Budaka Boys. As a result, it is very convenient for me to send my 8 year old to buy his chapati. Do not undermine your days of small beginnings. Most big name product brands started small. Work on the branding as you go along with the business since it is likely to significantly complement your other efforts. I have developed three household product brands from first principles today and hence know what it means.
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Sales Strategy: By now you should be having an idea about how you plan to sell your product. There are numerous ways snacks are sold and some of them include; roadside sales, door to door hawking, office to office hawking, supplying shops or supermarkets, online (whatsapp, facebook etc) among others. Your choice should be determined by the target market you have in mind, cost of product, packaging and capital investment at your disposal.
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Human Resources: Do you need to hire workers? Can you do this work on your own (at least for starters)? Are you able to pay the workers? Do you need workers in the production or sales and marketing areas? Ask yourself leading questions before you make a decision. Alternatively, even when you need workers, maybe starting with family labour could be a better strategy. It’s worth learning from the Indians here.
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Money: The snack business in its most basic form does not require lots of money to start. With UGShs 100,000/= (Approx US$ 30) one can kickstart this business. However, as stated earlier, being a low margin business, you will need to target volume sales before making sensible returns. This implies re-investing your proceeds religiously at least for the first six months in order to grow the business operations.
This may not be an exhaustive guide but should give you a good idea of the landscape you should expect to find going into the snacks business. Feel free to contact me for more detailed input.
James Wire is a Small Business and Technology Consultant based in Kampala, Uganda
Follow @wirejames on Twitter.
Email lunghabo [at] gmail [dot] com
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