Viability Of The Business Concept

1922 WordsNov 4, 20158 Pages
Viability of The Business Concept The business concept Kayi Davie and Abdallah Bawazir proposed after conducting research was to create a campsite using the plot of land Bawazir had inherited from his family and start a hospitality business that would be cheap to operate. They would target the international budget tourists commonly referred to as “backpackers” since it is a low-cost form of international travel. Backpackers would rely on public transportation and inexpensive accommodations to reduce costs. The two entrepreneurs had seen how successful this type of tourism had become in neighboring countries and desired to replicate this business in Rwanda. First of all to start their business, they already have a good starting point.…show more content…
Some decisions that Kayi and Abdallah had made is to invest $15,000 to build the necessary utilities and building for the campsite and $4,000 to cover working capital requirements during the first 18 months. Breaking Even If the partners were to charge $12 per night per bed as well as have a profit margin of 30% for food, 50% on beverages and 50% on hygiene products, and 100% on Internet, they would make a profit of $20.91 on each customer per night (see Exhibit 1) after getting taxed 18%. With a profit of $20.91, to break even from their initial investment of $15,000 for the tents, generator, construction, furniture/bedding, modems, wiring, landscaping, fridge/BBQ/TV, and their working capital of $4,000 for the first 18 months, they would need at least 909 campers (Exhibit 1) to break even, assuming every camper stayed for 1 night. Marketing Options Davie and Bawazir are faced with many options to choose from to attract a steady flow of customers. The first set of marketing possibilities the entrepreneurs can choose from is local partnerships around Rwanda. They can collaborate together with businesses that actively promote Rwanda’s backpacking culture and distribute brochures and posters at these locations in exchange for advertising space at the campsite for $50 per month. With this
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