19 October

Dear Friends of iZindaba Zokudla

Please join us for our next workshop as part of the Nxazonke: Urban Agriculture Enterprise Development pilot course.

Please also see the Facebook page on this event: https://www.facebook.com/events/1099048431783200

We will meet in B3 on the 19th of October 2024 at 9h00 for 9h30. We will meet until 13h00.

Please bring an ID Document, Passport, Birth Certificate or generic identification to gain access to campus.

Should you want to make a presentation at the Lab, you are welcome to do so in the “People’s Announcement hour”.

On the 19th of October we will be concluding the course for 2024. We will recommence with the course Nxazonke in February or March 2025.

Please see below for an extract from the upcoming book “Nxazonke: Urban Agriculture Enterprise Development”.

We will workshop financial management on the 19th of October, and please take a look at the below to see what you can do to understand your own finances.

We will be hosting an open session where you can ask any question on your financial management and any other aspect of your business.

I will also introduce the four anchors of any urban agriculture enterprise and this will enable newcomers to understand what I am proposing to make an urban agriculture enterprise profitable.

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Financial management: The six words necessary to be able to understand your enterprises’ finances.

There are six words that are commonly used in auditing that will enable you to understand the financial standing of your enterprise. These interrelate and together they form a system of bookkeeping that will enable you to stay on top of the operations and income and expenditure in your enterprise.

·       Sales Income – The money you make from each thing you sell or each service you sell.

·       Turnover – The number you get when you add together all the sales income amounts. It shows you the total amount of money you received from customers.

·       Cost of sales – These are expenses you have to pay for to make a sale. If it is products, like wigs or vegetables, then “Cost of sales” is what those things cost you to buy or grow.

·       Gross profit – This refers to the money you have left after you deduct the Cost of Sales from Sales Income.

·       Overhead or fixed expenses – These are expenses you have to pay for even if you do not sell anything. It is where things like electricity, water, rent and wages are added up.

·       NET Profit or Loss – This is the actual amount left after you deduct your overhead or fixed expenses from your gross profit.

Let us discuss each of these and how they interrelate.

·       Sales Income: This is most of the income you will receive. You may, in a business, receive income from investments, interest on credit you have given, and perhaps in selling big capital equipment that you owned before. However, sales income will be the biggest category, and this is the income that comes in and this has to pay for everything in the business. All the other things will be deducted from this sales income to eventually arrive at your nett profit/loss.

At this point it becomes obvious how important it is to record all sales in your record keeping system. It will be important to note all sales and also all other income. This gross overall amount is all the revenue that you will receive and gives you an overall idea of how much money flows through your enterprise.

·       Turnover – when we add all sales income (and any other income) we receive an amount that reflects all revenue, and this is “turnover”. This is the overall amounts you generate and note this as this is reflective of your overall economic impact.

·       Cost of sales is important to note. This is the money you need to spend to make a sale and it will be hard to distinguish this from overheads. The things that you will do even if you do not make a sale will be overheads, but the thing peculiar to each sale will be part of cost of sales. This is necessary to know as you may be spending too much time or effort or packaging on a sale. These costs need to be manageable but also appropriate to each sale. Because you will be selling from the farm, often directly to customers, you may have costs associated with your time and effort, and the packaging or receipts may not cost a lot. However, if you are selling on-line and you pay for the delivery, the delivery is then part of cost of sales.

·       Gross profit. When you deduct your cost of sales from Turnover, you find your gross profit. This is the profit you make after sales costs have been deducted. This gives you an idea of how efficient your sales system is. It gives you an idea of what money you have available to pay for overheads, and these are important.

·       Overheads and fixed expenses: These are the things you need to do just to keep the business ready for sales. This includes payments for technology, labour, tax, and things like local authority trading licences. Try to also factor in your own time, and pay yourself what you pay a worker, so you have an idea how much money your time means for the business. This will be a large amount and try to get this list as comprehensive as possible and note and examine this list every month, as you will have recurring expenses and you need to understand how they flow.

·       NETT profit/loss. You have to take a look at all your finances as these have to show a profit. If you cannot show a profit you need to re-think your intentions to farm, or, you need to change a lot of things in your farm. Deduct overheads from Gross Profit.

I suspect there may be many people who are farming at a loss or who are farming with very little income. This may be better than doing nothing, and these farmers may eat their own produce, but there should be better reasons to farm.

One of the reasons iZindaba Zokudla was developed is to enable urban farmers and other retailers to achieve proper and sustainable livelihoods through urban agriculture. To achieve this, we would need to change a lot of things, from the way we create agricultural inputs to the way we farm, sell and also how we engage with communities. Hence, to make this really work, we need to go against the history of agriculture, which is organised as a global system that trades across borders and uses mostly off-farm inputs sourced from mining and oil. The programme detailed here is one where local inputs will be sourced and manufactured, where new technology to process wastes are developed, and where sales are linked to the community and their own activities to bring farming inputs into the price equation.

By placing the community at the heart of the value creation of these enterprises, we create a new value proposition that immediately also links waste and engagement with production and sales of food. This is the driver of the competitiveness of urban agriculture. To understand if this will work, we need to empower individual farmers to experiment and adapt these suggestions. One way we can know if this is working, is to conduct a financial assessment often in the enterprise.

As we go along in the future, we will endeavour to bring these new learnings and innovation into the iZindaba. Take these suggestions as a learning opportunity and come back and share you insights. This is how we can build a new sector in the economy and change people’s behaviour in such a way that we safeguard our ability to produce food.