Investments for interim period (continues)
The business risk that the Spar owner must take is to invest the initial R1 500. To reduce risks for business owners, the Homecare team focus on areas first where we have business partners / Angel donators in place to immediately support the Spar partners.
We will within 3 days after the initial donation arrange that our partners support the Spar partner. We can thereafter work in a controlled environment to manage risks for our partners.
We expect that out of the property company and its staff alone, that we will secure R30 000 grocery purchases. The gross profit on R30 000 (if we work on 9%) will be R2 700. If you invest R5 000 (total initial donation) at 10% interest, the interest income will be R41.66 per month. We will already have surplus funds against the Investment account to reduce the capital amount invested. Our account managers together with Spar management can monitor the investment return and the Spar partners can withdraw from the project if they are not happy with our performance.
We are conservative in our planning. We estimate that the grocery bill for a family of 4 is about R8 000 per month. This includes basic essential foods, toiletries, as well as household cleaning detergents. We make provision that the people we will ask to support your company might still buy discounted products from other food supplying companies. We will however entice them to spend as much as possible with the partner. For us to work on R3 000 per family that will be spend at the Spar partner is a reasonable assumption.
What we also need to explain to Spar business owners is, that although we are going to include a large number of people to support the 50 Spar branches, we only need 50 people nationally to commit to buy R4000 worth’s groceries per Spar partner… Only 50 people can give each Spar business partner the minimum required spending to help us pay the interest on the investment accounts until we pay out the investment amounts out of income generated from other industries. Business owners do not need to worry about our ability to prepare for the National launch. Each business owner can if they commit to our business plan be assured that we will complete our important task.
We also already have a team of attorneys, donators, estate agents, financial advisors and social workers as partners. We publish a list of more than 160 people who we can immediately notify to support the Spar branches. Our first task is to position and finalize negotiations with Spar partners. We are now preparing to set-up the entire network and we work as fast as possible to complete the task before May 2018.
In a category A area, we predict to work with approximately 50 people (this is staff and business owners listed amongst the 9 categories discussed). The account managers only need each person to spend R100 per month at the Spar partner to manage the project. The 50 people exclude their friends and family who are also invited.
We publish 3 examples to clarify how we will require payments, and how funds will be paid. The Foundation will not receive additional commission if we exceed our “capital requirement” out of sales via the network:
List of people who will support food partners
In our example of 3 branches, we show how commission earnings will be logged against the capital account.
Branch 3 in our example is a branch where the commission on sales enabled the Foundation to pay of the Capital loan account via sales. In this example, the Spar owner actually owes the Foundation fees. Note that we will only ask the second month’s Capital contribution, although the Capital account is in negative. We will not require such branch at the end of the launch period to pay funds towards the Foundation. This branch in our example was just well supported by community members. We believe that we will have such scenarios in our launch project. We will in total over the launch period receive a maximum amount of R36 000 out of this branch, although the commission earnings would have been much more.
Branch 2 in the example will receive additional attention from our account managers. In this example, the project will still be on tract, as the sales, although smaller is still compared to the capital investment enough to ensure that we are not behind capital planning.
Branch 2 earned enough commission on sales (9%) to service the interest due on the capital amount. Remember that we will work to keep the Capital amount below our maximum target of R36 000 over the entire period and that Capital will at the end of the launch period be refunded out of income from other industries.
Business partners can withdraw their capital contributions if they are concerned that the current support team will not service interest on such account. Remember that we work with different areas and that our main focus is to get the support structure in place. There will be areas where larger community support is available than in other areas.
The account managers will push the immediate support team to spend more and we will only negotiate the next capital investment if the project is on track.
We will be able to manage the project out of other areas if we need to subsidize a specific block. (We will work in 50 blocks to reduce business risks for all the parties)
Category B and Category C Spar branches will be supported in the same way. There is no difference. The Category B branches require 50% of Category A branch’s sales and Category C branches require 25% of Category A branch’s sales. Every business partner will have a maximum risk that will on a monthly basis be re-evaluated.
Reporting on Sales per month
To make it easy for the Account managers, participants in the launch competition can only receive entries for spending at one Spar (the one nearest to them in our project plan)
If a Spar has its own loyalty cards, we will ask the participants in that area to register for such cards and mail us their Loyalty card numbers. The Spar owner can then at the end of the month provide us with a sales report on all those cards.
Spar without such cards, will receive a sales report from the account manager. We work with a fairly small number of people and two of our staff members will manage the project on a daily basis.
We ask people without cards to keep their till slips in a file. They will mail the account manager a summery (amount) that they had spent at the Spar. We inform them that part of the rules is that we can be asked randomly to arrange that the file with slips be brought to Spar manager. We also tell them that if they win the competition, that they will only receive the prize if they can hand in their till slips. It is an important project that is managed over a fairly short period. People will keep their slips for such a project… (We at least need one person out of 50 to do that!)
Spar owners can randomly ask us to arrange that till slips being delivered to the Spar.
After the launch competition has been completed, everything will become back to normal. We will calculate the capital that needs to be refunded and we will immediately stop to earn commission on sales.
The investment amount, that will eventually be refunded in total, can also be associated with media costs. The Business owner will over a set period invest small refundable amounts, that is constantly evaluated against ‘n Fixed Income base (sales) in order to save larger amounts on media costs after the phone app has been launched.
The cost savings alone to replace SMS costs is worth large amounts. Just to explain, if a business owner sends 7 000 SMS messages per week, the cost will be 7 000 X R0.19 = R1 330 per week or R5 320 per month. The new platform will reduce such costs to R1 680 per month. (R3 640 cost saving per month) The cost saving can be compared to an investment. This will result in R43 680 cost saving per year. You will have to invest R436 800 to get the same return at 10% on investment.
Business owners often pay media costs… With this project, the business owner will get a large portion Free media for years to come. (This will be all your seasonal greetings Plus personal messages that help us to position the business owner as a pillar in the community).
Under media, we also need to remind Spar business owners that there will constantly be “Word of mouth” marketing. There will be estate agents and financial advisors who will on a daily basis inform their clients about the Homecare project, and that a small team of Spar business owners help caretakers. The social workers will also inform the public they interact with about this unique Spar company who do everything possible to help community members. “Word of mouth marketing” in this form is worth millions! There is nobody else that can sell the business owner as a true pillar of the community!
This is truly a unique project where we plan everything to the finest. All our business partners (not only food supplying partners) will gain financially when they team up to support caretakers!
We know that there is a challenge ahead for our team. Not all the Spar branches have their own Loyalty cards. We investigate the option to use the national My Rewards card, but we are not sure if such card will give us enough support.
We will ask where possible that participants in the launch competition take up Loyalty cards from branches with their own reward programmes. These people are then requested to mail us their card numbers and use their Loyalty cards when they purchase products from your branch. This will enable us to review if the participants combined at least reached our minimum targets. Spar branches who do not have Loyalty cards will be supported where we ask participants to mail us copies of their till slips.