research laboratory and business incubator business...

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Buhoma Forest Gorilla Trekking Camp,

Research Laboratory and Business Incubator

Business Plan

MbararaUniversityofScienceofTechnology

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Published, 2015

Prepared by the MUBS Entrepreneurship Centre

Makerere University Business School

www.mubs.ac.ug

P.O.BOX 1337 Kampala Uganda

For

The Private Sector Foundation

On account of

Africa Development Bank

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Business Plan Of

Buhoma Forest Gorilla Trekking Camp, Research

Laboratory and Business Incubator

For

Mbarara University Science and Technology

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Sponsored by the African

Development Bank Facilitated by Private Sector

Foundation Uganda

Mission of MUST To provide quality and relevant education at national and international level with particular emphasis on Science and Technology and its application to community development.

Vission of MUST

To be a Centre of academic

and professional excellence in

Science and Technology.

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Table of contents 0.0 Executive Summary…………………………………………………………………………9 1.0 Introduction…………………………………..……………………………………………..11 2.0 The Business Concept………………………………………….……………………..…12

2.1 The Gorilla Trekking Camp……………………………………………………….12

2.2 The Research Laboratory………………………………………………………….13

2.3 The Business Incubator …………………………………………………………..13

3.0 Legal status of the project…………………………………………..………………….13 3.1 Legal status of the Gorilla Trekking Camp…..…………………………….....13

3.2 Legal status for the Research Laboratory and Business Incubator…….13

4.0 Sponsor………………………………………………………………………………..........13 5.0 Project Vision, Mission and Goals……………………………………………………..14

5.1 Vision, Mission and Goals of the Gorilla Trekking Camp………………….15

5.2 Vision, Mission and Goals of the Research Laboratory…………………….15

5.3 Vision, Mission, Goals and Objectives of the Business Incubator……….16

6.0 Key Success Factors……………………………………………………………………...16 6.1 Key success factors for the Gorilla Trekking Camp………………….……..16

6.2 Key success for the Research Laboratory………………..……………………16

6.3 Key success factors for the Business Incubator………………….…………16

7.0 PESTL Analysis………………………………………………………………………………17

8.0 SWOT Analysis of the Business Concept…………………………………………….18 9.0 The product…………………………………………………………………………………19

9.1 Products for the gorilla Trekking Camp……………………………………….19

9.2 Products for the Research Laboratory……………………………………..….19

9.3 Products for the Business Incubator…………………………………………..19

10.0 The Market………………………………………………………………………………….19 10.1 Market for the Gorilla Trekking Camp…………………………..………........19 10.2 Market for the Research Laboratory……………………………………………20

10.3 Market for the Business Incubator…………………………………………….20

11.0 Prices and Pricing ………………………………………………………………………..20 11.1 Prices and Pricing for the Gorilla Trekking Camp…………………………..20 11.2 Prices and pricing for the Research Laboratory………….…………………21

11.3 Prices and pricing for the Business Incubator………………..…………….21

12.0 Business Location…………………………………………………………………………21 12.1 Business Location for the Gorilla Trekking Camp ………………………….21 12.2 Business location for the Research Laboratory………………………………21 12.3 Business location for the Business Incubator……………..…………………21

13.0 Projected Demand and income ………………………………………………………22 13.1 Projected demand and income for the Gorilla Trekking Camp………….22

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13.2 Projected demand and income for the Research Laboratory….…………23

13.3 Projected demand and income for the Business Incubator……………..23

14.0 Promotion…………………………………………………………………………………….23

14.1 Promotion for the Gorilla Trekking Camp…………………..……………….23 14.2 Promotion for the Research Laboratory………………………………………23

14.3 Promotion for Business Incubator………….…………..……………………..24

15.0 Competition and industry……………………………………..……………………….25 15.1 Competition and industry for the Gorilla Trekking Camp………………….25

15.2 Competition and industry for the Research Laboratory…………………….26 15.3 Competition and industry for the Business Incubator………..…………….26

16.0 Operational aspects……………………………………………………………………...26 16.1 Land and Location for the Gorilla Trekking Camp………………………….26

16.2 Land and location for the Research Laboratory……………………………..26

16.3 Land and location for the Business Incubator………………………………27

16.5 Buildings………………………………………………………………………………28

16.6 Furniture and Equipment…………………………………………………………28

16.7 Electricity ……………………………….……………………………………………28

16.8 Water ………………………………………………………………………………....29

16.9 Motor vehicles………………………………………………………………………29

17.0 Management aspects…………………………………………………………………….29 17.1 Management aspects of the Gorilla Trekking Camp………………………29

17.2 Management aspects of the Research Laboratory…………………………30

17.3 Management aspects of the Business Incubator…………………………….31

17.4 Roles of staff in the Organogram……………………………………………….32

18.0 Benefits of Business Incubators to the Different Stakeholders……………..33 18.1 Benefits of Business Incubators to students……………………………….33 18.2 Benefits of Business Incubators to the government………………………33 18.3 Benefits of Business Incubators to the private sector……………………34 18.4 Benefits of Business Incubators to the university…………………………34 18.5 Benefits of Business Incubators to the society……………………………..34

19.0 Financials…………………………………………………………………………………….34 19.1 Financials for the Gorilla Trekking Camp as per feasibility study……....34

19.2 The Break Even Analysis…………………………………………………………38 19.3 Financials for phase one implementation of the business plan………..39

19.4 Financials for the Research Laboratory………………………………………...42 19.5 Financials for the Business Incubator………………………………………….42

20.0 Implementation of the Business Plan………………………………………………..44 20.1 Implementation of the business plan for the Gorilla Trekking Camp……44 20.2 Implementation matrix for the Research Laboratory.............................47 20.3 Implementation matrix for the Business Incubator…………………..……..48

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Appendices ………………………………………………………………………………………..….51 Mbarara University of Science and Technology…………………………………….Appendix i The African Development Bank (AfDB) HEST Project ..................................Appendix ii The Research Laboratory and Business Incubator …………………………….Appendix iii

Accommodation facilities for the Gorilla Trekking Camp………………………Appendix iv

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List of Tables and Figures

Table 1: Projected Demand and Income as per feasibility study…………………..………22

Table 2: Projected Demand and Income as per implementation of business plan phase one………………………………………………………………………………………………………..22

Table 3: Total Project Costs…………………………………………………………………………35

Table 4: Projected Income Statement Currency US Dollars……………………………......36

Table 5: Net Present value analysis Currency US Dollars…………………………………..37

Table 6: Pay Back Analysis Currency US Dollars……………………………………………..37

Table 7: Break Even Analysis………………………………………………………………………39

List of Figures

Figure 1: Michael Porters Five Forces Model………………………………………………… ..26

Figure 2: Organisational Structure of the Gorilla Trekking Centre………………………..30

Figure 3: Organisational Structure of the Research Laboratory………….………………..31

Figure 4: Organisational Structure of the Business Incubator……………....................32

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List of Abbreviations

AfDB Africa Development Bank

BMCT Bwindi Mgahinga Conservation Trust

GVTC Greater Virunga Transboundary Collaboration

HEST Higher Education, Science and Technology

IGCP International Gorilla Conservation Programme

ITFC Institute of Tropical Forest Conservation

MOESST Ministry of Education, Sports, Science and Technology

MUST Mbarara University of Science and Technology

PSFU Private Sector Foundation Uganda

SWOT Strengths, Weaknesses, Opportunities and Threats

USD United States Dollar

UWA Uganda Wildlife Authority

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0.0 Executive Summary 0.1 Introduction

The Mbarara University of Science and Technology (MUST) with financial assistance from the Africa Development Bank (AfDB) and technical assistance from the Private Sector Foundation Uganda (PSFU) is implementing the decision to establish a tourist camp in Buhoma alongside strengthening of the existing field Research center (ITFC) and commencement of Business Incubator at the main campus of the University. This business plan follows the acceptance of a feasibility study for the establishment of a Gorrilla Trekking Camp by AFDB. MUST will use the available funds in a phased manner to construct the tourist Camp facilities and strengthen the field research center while also establishing a business incubator.

0.2 Business Concept

The business idea is the establishment of a Gorrilla Trekking Camp at Buhoma adjacent to the Bwindi Impenetrable Forest National Park. The project is intended to promote tourism, research and generate revenues for MUST. MUST has already an existing field research center, the Institute of Tropical Forest Conservation (ITFC) at Ruhija. This Centre is aimed at biodiversity conservation and forest habitat restoration and as an additional activity will be involved in production of indigenous forest tree seedlings in collaboration with the Uganda Wildlife Authority (UWA) and availing them to farmers in the area for planting. This will be one more additional activity that MUST will be contributing to its main goal of community outreach. The tree seedling production will be those highly regarded by the local people as important for medicinal and basketry making purposes as well as income generation. ITFC already has an ethno botanical garden located at the forest boundary in which several plant and forest species used by the local people for medicinal and craft making is showcased. This ethno botanical garden will be enhanced to produce tree seedlings that will be sold to local farmers at affordable rates. The Gorilla Trekking Camp and lodging will be located in Buhoma (where MUST has land). Both the cottages and resource center (meeting room) will be equipped with the necessary materials to generate income from tourists accommodation (cottages) and holding meetings and workshops (resources center) for conservation partners around Bwindi and beyond).

0.3 Legal Status

MUST is a government owned university established under the Universities and Other Tertiary Institutions Act of 2001 and is managed by a University Council which can sue and be sued. The tourist Camp, Research Laboratories and Business Incubator will be independent units of the University but not separate legal entities.

0.4 Project Vision, Mission and Goals The vision and goals of the project is to promote tourism and conservation while generate income for the university and encouraging research to improve quality of teaching and to also encourage generation of ideas and products that can lead to startup and reduce unemployment.

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0.5 Key Success factors

The tourist experience is determined by the peaceful conditions in the country, continued availability of the gorillas in the country, availability of good accommodation and good management. For the research laboratory and business incubator, their success will depend on the commitment of the university to start the respective activities and to fund them.

0.6 The SWOT Analysis The availability of land, the presence of the current field Research Centre (ITFC) and funding from ADB are the key strengths of the project. Bwindi Forest and the presence of mountation gorillas is the biggest opportunity. The threats of the project include competition form the existing camps, the number of arriving tourists and the availability of funding. On the other hand, the fact that the projects are owned by the University which are bureaucratic in nature with funding problems are major weaknesses.

0.7 The Products The tourist experience is the main product of this project which will be availed by the rooms for accommodation, the meals and the actual tours to view the Mountain Gorillas. New ideas as products and business startups will be the other products of the project.

0.8 The Market, Pricing and Business Location Gorilla viewing is an international tourist attraction and many tourists come from around the world to view the gorillas. They are reported to be only 800 gorillas located in the forest in Uganda, Rwanda and Congo. In Bwindi, there are estimated to be about 300 gorillas. The Bwindi forest in itself has only 13 gorilla groups that have been habituated (trained) for tourists viewing. Of these 3 groups are located in Buhoma, 7 groups in Rushaga and 3 groups in Ruhija. Because gorillas, are located in a particular place and those who want to view them must go to that place, the prices for accommodation range from USD100-USD700. This project intends to charge prices ranging between USD70- USD200 per night. The Gorilla Trekking Camp will be located in Buhoma in land owned by the University adjacent to the Bwindi Forest, whereas the research laboratory and business incubator will be located at Mbarara where they will be utilized by staff and students of MUST.

0.9 Projected Demand The camp will construct 40 bandas and they are expected to be of various types and sizes with a minimum occupancy of 60%. The incomes are expected at approximately USD1million in the first year and will rise to USD 1.4million by the fifth year. However, the phase one construction of the camp will have 20 bandas and expected to generate revenues of approximately USD 500,000 in the first year and rise to 700,000 by the fifth year.

0.10 Industry and the Competition

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Micheal Porters Five forces model reveals that entry into this industry is not easy because the players need to be near this forest with permission from both the Uganda Wildlife Authority. While the costs of establishment are low, entry into the industry is restrictive. Because of the nature of the buyers, that is the tourists, who come to specifically view the gorillas, they do not have strengths to bargain hence the project can charge high prices. Gorilla viewing has no close substitutes. There already existing number of service providers in the region, however MUST intends to position itself as a low cost competitor providing high quality products. Competition is expected from the existing service providers but not intense.

0.11 Operational aspects As stated, MUST has land on which the Gorilla Trekking camp will be constructed which is an ideal location for gorilla viewing. The location is supplied with water and electricity. The buildings will consist of 40 bandas, resource center (meeting room), bar and a restaurant. The Resource Center will have a sitting capacity of 100 people. The research center already exists and will be strengthened to produce trees seedlings and seeds in collaboration . Already the existing ethnobotanical garden owned by the research center has various tree seedlings and mature trees being showcased there. This garden will be enhanced to produce large quantities of indigenous tree seedlings to be sold to local farmers at affordable prices. This contributes to MUST’s goal of community outreach programmes. Other existing laboratories will be strengthened in the respective faculties. A Business Incubator will be established at the main campus. The University will find office space from existing buildings.

0.12 Management The Gorilla Trekking Camp will be tendered to an independent management company and Council will establish a Board of Directors to oversee the activities of the Camp with the view of running the camp commercially. The research laboratory will be managed like any Faculty of the University while the Business Incubator will have an independent manager, a board of Director and mentors who will work on a need basis.

0.13 Financials The project requires an investment of USD 808,000. Of this, 573,000 is for the construction of the buildings and the balance of 235,000 will go into equipment. The money for the equipment will be used for the incubator 60,000 and the balance 175,000 for furniture and equipment for the Trekking Camp. The money available from AfDB is shs 435,000. The construction of the buildings will be phased starting with buildings worthy 265,000 which is about 50% of the required buildings and the furniture and equipment will be acquired also in a phased manner.

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Business Plan Of Buhoma Forest Gorilla Trekking Camp,

Research Laboratory and Business Incubator

For Mbarara University of Science and Technology

1.0 Introduction The African Development Bank (AfDB) has availed funds to the Government of

Uganda to support improvement of higher education especially in the area of

Science and Technology. The objective of the funds is to improve the quality of

High education through research and to support universities to find alternative

sources of funding in light of declining funds from government. The AfDB

recommended the establishment of income generating activities and incubators

and engaged the Private Sector Foundation of Uganda (PSFU) to manage the

process of conducting the feasibility studies and actual establishment of projects

and incubators in the universities. The funds are administered by the Ministry of

Education, Sports, Science and Technology (MESST)

The Feasibility Study

Through a consultative process in different universities, income generating

activities were identified and one was finally selected for which a feasibility study

was prepared, submitted and approved by the Ministry of Education and the

African Development Bank.

A key objective of the study was to establish a Business Incubator, however it was found that universities usually have research laboratories which may not necessarily act as business incubators but generate new ideas and new products. It was therefore agreed and recommended that since research is a key component of any university, research laboratories be established in these universities. This business plan therefore includes aspects of establishment of a research laboratory and a business incubator. However these two activities are not necessarily income generating activities and therefore in drawing up the business plan, not much attention is given to the financial planning of these activities. However, important aspects of their operationalization are contained in this plan.

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2.0 The Business Concept MUST selected the Gorilla Forest Trekking Camp as the business idea to undertake along with a Research Laboratory and a Business Incubator. The university intends to use the AfDB funds available to start on the construction of the Gorilla trekking camp. The university will use existing facilities to establish both a Research Laboratory and a Business Incubator. The proposed business ideas are as follows: 2.1 MUST Gorilla Forest Trekking Camp

Mbarara University of Science and Technology (MUST) has land in Bwindi Forest area totaling to 246 hectares. This land borders the Bwindi Impenetrable National Park (BINP). MUST located one of its departments, the Institute of Tropical Forest Conservation (ITFC) at Ruhiga adjacent to the BINP.

The ITFC is a department responsible for monitoring and training through research to strengthen conservation and sustainable management of Bwindi Mgahinga conservation area. MUST has agreements with Uganda Wildlife Authority which is a Government agency responsible for the management of the conservation area. The Bwindi Forest is reknown for mountain gorilla viewing and is one of the country’s tourist attractions. MUST presently has an agreement with a private company to operate a tourist camp on the MUST land at Buhoma.

As part of the PSFU and AfDB initiative, MUST is starting an income generating project that will also support the research effort of the camp. The project involves establishing and operating a tourist camp at Buhoma to take advantage of the environment and also strengthen the research activities of the Centre. MUST will construct a camp on 3 hectares of land which will serve tourists visiting the Bwindi forest. It will also be used by researchers visiting the Institute of Tropical Forest Conservation (ITFC). The camp will serve mainly as a resting camp for tourists who wish to view the Mountain gorillas but will also meet demands of ordinary tourists.

Additionally, the project will be involved in planting of indigenous forest tree seedlings to farmers in the local community at a minimal cost and also production and sale scientifically based local herbs for the community. The production of the forest tree seedlings will involve collaboration with UWA since the tree seeds and seedlings will majorly be got from Bwindi forest in a sustainable manner. Already ITFC has an ethnobotanical garden that has several indigenous trees and seedlings used for medicinal and basketry purposed showcased to visitors. The ITFC ethnobotanical garden will be enhanced to produce large quantities of seedlings to supply to local farmer for planting at affordable prices.

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2.2 Research Laboratory Universities have research laboratories where professors and other researchers who may be researching into specific aspects specifically to generate new knowledge. These are new products which they may wish to develop into proto types. Laboratories provide facilities for experimentation and give opportunity for researchers to try out different aspects before these can be transformed into other uses including commercial use.

2.3 Business Incubator The business incubator will be established at the MUST main campus. The incubator will nurture business ideas and provide support services from staff and students of MUST.

3.0 Legal status of the project Public Universities are managed by University Councils and are legal entities that can sue and be sued. They can establish different types of units under their remit.

3.1 Legal status for the MUST Gorilla Forest Trekking Camp This project is in an area where MUST has a research centre (the ITFC) and the research centre activities will impact on the Forest Camp and vice versa. The camp will therefore be managed as an independent unit of the university rather than a separate corporate legal entity. The camp will therefore be operating as a university department and the University Council will have the residue legal responsibility over the activities of the Camp.

3.2 Legal status for the Research Laboratory and Business Incubator Like the trekking Camp the research laboratory and business incubator will operate as independent units of the university and not separate legal entities.

4.0 Sponsors MUST is the owner of the project and therefore the main sponsor of this project. However AfDB through PSFU are the principal fund providers for the project. As a public university owned by government, MUST can resort to government to avail funds through the normal budgeting process.

5.0 Project Vision, Mission and Goals The project has the three aspects of the tourist camp, research laboratory and the business incubator. Each of the different aspects has its unique vision, mission, goals and objectives.

5.1 Vision, Mission and Goals of the Gorilla Trekking Camp 5.1.1 Vision

MUST is taking advantage of the vast land it has adjacent to Bwindi forest and its proximity to the forest to generate income, promote tourism and

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research in forestry and forest products. The vision of this is to promote tourism while generating revenues both for the country and the university. It is envisaged that the project will sell the university in its research activities while promoting tourism.

5.1.2 Mission

The mission of the trekking camp is to promote research and generate income from the university’s natural resources.

5.1.3 Goals

The overall goal of the project is to enable MUST take advantage of the land that is adjacent to Bwindi forest to promote research, tourism and income generation.

The specific goals are:

• To promote tourism in the country

• To generate income for MUST

• To attract international researchers to the tropical forest

5.2 Vision, Mission and Goals of the Research Laboratory 5.2.1 Vision

Research is a key pillar in university systems. It provides a source of new knowledge and in some cases new products. Universities that advance in knowledge creation are also seen as successful. The research laboratory will propel the university into a position of one of the leading universities in the region. MUST already has a research in institute in the area. This laboratory will be strengthened while other laboratories are established in the university to cater for the other subjects.

5.2.2 Mission

Promote quality teaching and generation of new knowledge through research

5.2.3 Goals

• To promote research in forestry and other specific areas where MUST is competent

• To encourage generation of new ideas and products

• To promote conservation of forests and nature • To help solve societal problems through research

• To provide cheap tree seedlings to farmers 5.3 Vision, Mission, Goals and Objectives of the Business Incubator

5.3.1 Vision A community that perceives opportunities and converts opportunities into businesses addressing the issues of unemployment through start up

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5.3.2 Mission.

To promote business startup within the university community and the region

5.3.4 Goals

• To nurture ideas

• To stimulate business start up

• To address unemployment among university graduates

6.0 Key Success Factors 6.1 The Gorilla Trekking Camp

The following will be essential a) Peace and stability in the country to allow tourists b) Bwindi forest reserve will continue to thrive c) The university will build the bandas for the camp d) The management that will win the contract to run the camp will be

professional and business oriented e) The board managers identified will meet the set targets f) Collaboration with UWA for the production of tree seedlings to

supply to farmers.

6.2 The Research Laboratory a) The university will take the initiative to establish the laboratories b) The university will fund the laboratories c) The professors and will take the initiative to undertake the laboratory

activities

6.3 The Business Incubator a) Students and staff will come up with ideas b) The identified manager will measure up to the task c) The university will find the funds to run the incubator d) The board mentors will perform their task diligently

7.0 PESTL Analysis MUST is a government owned educational institution that is mandated to offer educational programmes. To be able to do this, it also has a mandate to achieve its other activities that enable it to achieve its primary objective. Understanding the environment in which it operates is very important since business is an opportunity lacking out there in the environment. Government units are not known to undertake business because of their social orientation. For this reason, it has been recommended that private organization that is business oriented runs the trekking camp. To be able to understand the opportunities that the business will face, the following analysis is crucial;

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Political factors The country has been undergoing political change under the NRM government. Upto to 2000, the government was run under a no party system and there after it was opened up to multi-party system. Despite this, the years of the NRM government have been years of political stability and peace in the country giving opportunity for business to thrive. One of the key issues government has advanced, has been the role of business in society more important the role of the private sector as the lead sector in economic growth. Government policy therefore has been allowing free market policies with less government interference. This project is a private public partnership where the owner is a public institution expected to be managed by the private sector institution. The political stability and this partnership should enable the project to succeed.

Economic factors Ugandan economy has been growing at 5% per year. This growth has been facilitated by the political decisions to allow free enterprise to operate in the country. This policy has allowed startup of business and growth of tourism in the country. Tourism is a key economic activity in the country that is encouraged and supported by government. The mountain gorillas in the Bwindi forest area is an opportunity for MUST to undertake the planned economic activity. The Bwindi forest and the proximity of MUST to Bwindi creates this opportunity.

Social Cultural Factors Internal tourism in the country is limited and gorilla viewing is not an activity that Ugandans would think of undertaking. This acts us a limitation to the trekking camp because of the limited interest by locals in the planned business. Even with the growth of the population in the country, there are very limited opportunities

Technological Factors The technological changes taking place worldwide have little impact on tourism especially gorilla viewing. However availability of technology will give visitors the comfort of access to world information through the Internet during their stay at the trekking camp. It is an opportunity to link up visitors with their homes. The Gorilla trekking camp will thus be equipped with a satellite Internet facility to link it to the world. Already, ITFC and UWA use a satellite Internet link for their communication.

Legal Factors MUST is a public institution established under the Public and Other Tertiary Institutions Act. It can be sued and sue. Its mandate creation and imparting of knowledge but is allowed to undertake those activities that enable it to achieve its primary goals. The trekking camp is an activity MUST can undertake legally and can contract out the management of the camp.

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8.0 SWOT Analysis of the Business concept Strengths

• Location in the Bwindi Forest area • Ownership by a Public University • The huge land in Buhoma (246 hectares) • Presence of a research institute in the ITFC • Availability of funds by AfDB

Weaknesses

• Location, located away from mainstream tourism area • Funding shortages • Ownership by a university • Bureaucracy

Opportunities

• Location in Rural Setting • Near the boarders (Congo, Rwanda, Tanzania and Burundi) • location in an area with gorillas • A growing tourist market • Good will from the Government • The huge land in Kihumuro (234 hectares) and Buhoma (strength & weakness) • ITFC conservation centre for tourism, agriculture, research, students exchange

programs, neighbouring countries • Other gorilla groups (10) available for tourists for viewing (e.g. Rushaga and

Ruhija) apart from Buhoma • Other conservation and development organisations working around Bwindi (UWA,

IGCP, GVTC, BMCT). These will hire and use the meeting rooms for conferences and meetings.

Threats

• Competition from existing trekking camps • Declining Government funding • Animals moving away from vicinity • Tourists not coming to Uganda • Limited number of people (8) allowed to view gorillas per day

9.0 The Products 9.1 Products for the Gorilla Forest Trekking Camp

The camp is a tourist facility where visitors will rest and eat and also base to visit the Bwindi impenetrable forest. The camp is a hotel facility constructed to match nature and will have 40 beds. The products will therefore constitute accommodation, restaurant and bar and forest tours. The camp will have the following facilities/products:

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i) Rooms for accommodation ii) Restaurant iii) Bar iv) Tours v) Meeting rooms for hire, conferences and workshops.

9.2 Products for the Research Laboratory The researchers will generate research reports which will contain recommendations on the various research undertakings, the recommendations may be in form of new ideas or may also take form of prototypes of new products.

9.3 Products for the Business Incubator

The incubator will attract individuals with ideas which will be concretized through business plans as intermediate products. Startups of businesses will be the main products of business incubators

10.0 The Market 10.1 Market for the Gorrila Trekking Camp

Bwindi Impenetrable Forest is a world famous location for tourism. It attracts tourists wishing to view the Mountain Gorillas. Mountain gorillas are the largest living primates and they are said to be less than 1000 left in the world therefore an endangered species that needs adequate protection. These Gorillas are very fragile and susceptible to disaease such as flu and scabies got from human beings. In Bwindi Impenetrable National Park, there are estimated to be about 400 mountain gorillas and 13 gorilla groups that have habituated (trained) for tourists viewing. Their location is mainly the Albertine region and they live on the slopes of the Mountains. While they are large animals, they are said to be social. They live in groups and are big attractions for tourists.

Tourism is one of Uganda’s economic priorities and gorilla viewing tourism offers Uganda its only competitive edge over Kenya and Tanzania. The business idea of a tourist facility for Gorilla viewing is therefore a marketable idea. However, because of the nature of primates, accessing them is restricted. Gorillas can easily catch human diseases

The market will constitute generally tourists who come to Uganda purposely for gorilla viewing. However the university will also attract researchers and internal visitors who will sleep in the facility.

10.2 Market for the Research Laboratory The products for the research laboratory are ideas and possibly prototypes from the research effort. The research ideas will be used to improve

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teaching and may inform policy. The product prototypes may turn into possible products for commercialization either through the business incubator or by businessmen / industrialists

10.3 Market for the Business Incubator The business incubator nurtures ideas that are turned into businesses. Businesses address issues of unemployment and if the business idea serves a need, the market for the business idea is the general public that consumes the products that are produced from the start ups that come from the incubator

11.0 Prices and Pricing 11.1 Prices and pricing for the Gorilla Trekking Camp

The tourist product in the Bwindi Impenetrable camp area are unique compared to other tourist products in the country. Visitors primarily go to view gorillas in a forest. The facilities are therefore made specifically for that. The accommodation consists of boundaries that are built to blend with the nature Rooms per night range between USD 100-700. The USD 700 is the higher end of the market and is mainly for international visitors who come specifically to view Mountain Gorillas. The low end of the market is an average of USD 100 per night. This project proposes to price its products to cater for both the low end of the market and the medium end. The price will range therefore from USD 70 to 200 per night. The lower end of the market will be for Ugandans while the USD 200 will be for the international guests. The meeting room will also generate income form hosting workshops and meetings by the partners such as IGCP, UWA and BMCT.

11.2 Prices and pricing for the Research Laboratory Research products cannot be priced in an ordinary manner however there

is need to protect the intellectual property rights through patenting. MUST

has already done this with one of its products. The idea of intellectual

property rights protection should be addressed among the various

universities to ensure that the owners of the ideas are protected. It is

recommended that MUST ensures that new ideas are patented.

11.3 Prices and pricing for the Business Incubator Business ideas and startups are the products of incubators. There is no pricing for such products other than the fact it contributes to addressing unemployment and also creates products that society needs. The ideas

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from startups should also be protected through patenting if they are unique and have not been patented before.

12.0 The Business Location 12.1 Business location for the Gorilla Trekking Camp

The tourist camp will be in Buhoma in the land owned by the university. The availability of the land adjacent to the forest gives it the necessary competitive advantage. The major need that the business will satisfy is a place where those who want to view gorillas can stay. This therefore is naturally the place where tourists can base to make their visits. Buhoma is that natural location.

12.2 Business location for the Research Laboratory The research laboratory is an activity of the university and the products benefit principally the university and may be used in the incubators as products to be commercialized. The laboratory is located in the university where the ideas are consumed. Should there be need to commercialize these ideas or internationalize them, this will be done through university processes, conferences, seminars and workshops

12.3 Business location for the Business Incubator The physical incubator will be located in the university and the key incubates are university staff and students. In future, the incubator may be open to outsiders. The location is adequate.

13.0 Projected Demand and Income 13.1 Projected demand and income for the Gorilla Trekking Camp

The location of the facility is a tourist area and also house the ITFC, a Research laboratory for MUST. It is expected therefore that some of the visitors will be visiting the Research laboratory while others will be generally tourists. The Camp will have 40 rooms but two of them will be for the manager of the Forest Camp and 38 will be for commercial purposes. However since the construction will be in a phased manner, the first phase will have a total of 20 rooms. The occupancy rate in year one is estimated at 60 percent and will grow to 80 percent by the third year. The camp will be promoted as a tourist destination and besides tourism and a place where retreats or holiday vacations can be undertaken. The guests of the Research Centre will have meals and also use the bar. Using the above occupancy rate, the projected demand is below;

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Table 1: Projected Demand and Income as per feasibility study

Item Year One Year Two Year Three Year Four Year Five

Bed (38)(number of guests)

Beds per day 22.8 22.8 30.4 30.4 30.4

Revenue from Beds 832,200 832,200 1,109,600 1,109,600 1,109,600

Meals 199,728 199,728 266,304 266,304 266,304

Bar ($) 16,644 16,644 22,192 22,192 22,192

Meals for meetings 15,600 15,600 15,600 15,600 15,600

Meeting Room 5,200 5,200 5,200 5,200 5,200

Expected income

1,069,395

1,069,395

1,418,926

1,418,926

1,418,926

Table 2: Projected Demand and Income as per implementation of business plan phase one

Item Year One Year Two Year Three Year Four Year Five


Beds per day 12 12 16 16 16

Revenue from Beds 438,000 438,000 584,000 584,000 584,000

Meals 105,120 105,120 140,160 140,160 140,160

Bar ($) 8,760 8,760 11,680 11,680 11,680


Meeting Room 5,200 5,200 5,200 5,200 5,200

Expected income

572,680

572,680

756,640

756,640

756,640

Table 2: Projected Demand and Income as per feasibility study

Assumptions

a) Occupancy i) Year One and Two, 60% occupancy ii) Year three onwards 80% occupancy

b) Meals

i) The tourist camp is located in the forest and visitors cannot have meals elsewhere. It is therefore assumed that residents will be on full board basis (i.e breakfast, lunch and supper). Therefore all the

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residents will have lunch and dinner. The cost is estimated at 12 dollars per meal. This will not be part of the accommodation charges.

ii) 10 percent of the residents will spend money in the bar equivalent to 20 dollars per day

iii) The ITFC will hold meetings with people coming from outside ITFC. This is estimated at an average of one meeting a week for 20 people at 15 dollars per meal per person. This will give an additional income to the restaurant. The meeting room will be hired at 100 dollars per day at an average of once a week.

iv) It is assumed that the demand for meals for meetings will remain constant through the five years and the same for the meeting room. The meeting room will generate income from howting workshops and meetings by partners like IGCP, UWA, BMCT. Depending on the number of persons using the facilities. It is estimated that to be hired at a cost of USD100 per day.

13.2 Projected demand and income for the Research Laboratory The services of the laboratory are demanded by researchers. The utilization of the laboratory will be on how active the researchers in the institution are. The ideas from the laboratory will not generate income hopefully with time they will generate patents which will generate royalties

13.3 Projected demand and income for the Business Incubator Successful incubation of ideas takes time. It is expected that every month, a total of 10 business ideas will be received however only 20% of them will go to the mentoring stage. Out of the 120 ideas that will be generated annually only about 10% will be nurtured successfully. There is no expected income from these ideas even when they fully commercialize, it is expected that the incubator will benefit from royalties after several years of operation. The university will work out depending on the type of idea, contribution from sales revenues that successful startups will contribute to the incubation centre

14.0 Promotion 14.1 Promotion for the Gorilla Trekking Camp

Bwindi is an international tourist attraction. The camp management will avail information to the Uganda Tourism Board to market it along with other Gorilla trekking tourist attractions. The Camp management will also market the product through tour agencies at Entebbe and Kampala. Adverts will also be taken out online. The University will also conduct a

25

local tourist campaign for the camp to be used as a place for retreats, meetings and holidays.

14.2 Promotion for the Research Laboratory Research is a key activity of the university and the effort to use a research laboratory is within the academic leadership of the respective institutions. University lecturers need to research and publish to be promoted therefore this needs not much effort to promote. The leadership of the laboratory will however encourage researchers in the university to take up ideas

14.3 Promotion for Business Incubator Incubators are viewed as centres to address unemployment especially among young people. There will be need to inform students about the existence of the incubator and encourage them to promote business ideas. The university should do this through university business plan competitions. The incubator will also prepare promotional materials to distribute to students.

15.0 Competition and Industry 15.1 Competition and industry for the Gorilla Trekking Camp

The industry Bwindi Impenetrable forest is specifically for gorilla viewing. It is reported that this forest has about 300 gorillas. Already there are 9 operators in the area. The biggest challenge with the location and type of tourism is that there should not be too much human traffic to the sites. This is because too much traffic may distress the animals. Besides it is also feared that the gorillas may get diseases out of interaction with humans.

Unlike humans, it is not easy to detect, examine and treat the primates. The activities of the camp will be restricted both by actual access to the gorillas and the existing competitors. This will require collaboration with existing operators. However the pricing by the proposed camp will be an advantage to the camp. Besides the project has its own captive visitors who would be visiting the research station.

Tourism is one of the key sectors in the Ugandan economy and the Uganda Government tries to promote tourist activities in the country. This is done through the Uganda Tourism Board. Uganda has a variety of tourist attractions however mountain gorillas are a unique product that attracts specific people. Those trekking mountain gorillas are usually willing to pay high prices and this is the unique part of the industry.

Porter’s Five Forces model

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Using Porter’s Five Forces model, entry into the industry is restricted due to the nature of tourist products that is the forest with gorillas and there should be no much interaction with the animals. This in a way restricts entry of other operators in the market. Gorillas are a unique tourist product for which there’s no close substitute. Tourists who want to watch gorillas do so deliberately and cannot substitute them for something else. That’s why even the prices of the accommodation facilities are so high. This reduces on the intensity of the competition. Porter argues that if the buyers are many, they tend to affect pricing of the product, however, the individuals who want to watch gorillas are not like other tourists, they are usually on the upper end of the market and pay the high price of flying into Uganda and pay high rates of accommodation to see the gorillas. This tends to reduce on the competition with other tourist facilities.

Regarding the suppliers power, there is a limited number of gorillas, and this makes the competition stiffer for the different service providers. In overall terms, the nature of the product imposes restrictions on the different competitive aspects of the product. The competition will not be very intense because of the type of industry, however should the demand grow, then the competition will be more intense as the need to watch the gorillas will increase and yet there should be limited access them. This may pause as a key risk to the project.

Figure 1: Michael Porters Five Forces Model

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Threat of new entry Entering this industry requires presence in this forest area. The area is controlled by the National Forestry Authority and Uganda Wild life Authority. Entry is therefore not easy. This restricts competition.

Supplier power Because of the nature of the industry, the suppliers are few. They are therefore able to charge higher prices.

Threat of substitution This product has no close substitutes, therefore prices will be high

Buyer power The visitors who come to view gorillas are usually those with resources. The unique demand to view the gorillas makes them pay the higher hotel fees. They are few and cannot demand for lower prices.

15.2 Competition and industry for the Research Laboratory Research falls in the industry of knowledge creation. New knowledge improves teaching and may generate new products and services. New products that are successful are subordinate. Uganda is at a stage where there are very few patents. This means that the generation of new knowledge is not as widespread and therefore there is no competition in the industry.

15.3 Competition and industry for the Business Incubator Incubators nurture ideas that are ultimately converted into business startups. This is an avenue of addressing unemployment in a community. Uganda has massive unemployment and there is a lot effort by government and non-governmental agencies in addressing unemployment. The demand for incubators is tremendous and therefore there is hardly any competition in this respect

16.0 Operational aspects 16.1 Land and Location for the Gorilla Trekking Camp

The project is owned by MUST and will be located at Buhoma on land owned by MUST. The land here is 246 hectares. The camp will use up only three (3) hectares. It will be located in a place called Mgahinga as indicated on the map attached. The location is ideal for tourism purposes focusing on Mountain Gorilla trekking.

16.2 Land and location for the Research Laboratory MUST has already made some progress on the establishment of the laboratory. Mbarara has the Institute of Tropical Forest Conservation

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(ITFC) located at Ruhija this is a research Centre intended to preserve forests. This Centre will be strengthened to be able to breed trees. MUST also has some research effort in medicine and has patented a product from that effort. These laboratories simply require strengthening through improved structures and incentives for researchers to conduct research. The facilities electricity and water are all available and simply require leadership at the academic level.

16.3 Land and location for the Business Incubator The university will identify space within existing buildings to establish an incubator. The incubator requires office space for the manager and Skelton administrative staff, a meeting room for the board and mentors meetings. There is need for both office and workshop as detailed in appendix iii

Pending acquisition of independent meeting facilities, existing ones will be used for the board and mentors mentors

16.4 Buildings The buildings will be bandas which blend well with nature. A total of 40 bandas will be constructed. Two will be for use by the manager and 38 for commercial purposes. The accommodation will be of 3 different grades including the following:

a) 15 room single bed self-contained rooms each 29 square metres b) 15 room double bed / twin bed rooms each of 30 square metres c) 10 room apartment type of bandas with a kitchenette and spacious working

area. Two of these will be for the managers d) A 10 room workers ordinary house e) A Banda like dining bar, restaurant and kitchen f) Meeting room/resource centre to sit about 100 persons

It is therefore estimated that the buildings will cover 1910 square metres at a cost of 300 U.S dollars per each square metre.

Accommodation facilities i) Single bed self-contained ii) Double bed / twin bed iii) Apartment type of bandas with a kitchenette and spacious working area. iv) Workers ordinary house v) Restaurant vi) Bar vii) Meeting rooms

16.5 Furniture and Equipment

The rooms will be furnished with simple furnishings that also blend with nature and the kitchen will be operationalized with modern cooking facilities. The meeting rooms will have computers, projectors and equipped

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with internet (satellite internet connection, power point projectors and accessories.

16.6 Electricity While the main power grid is available in the area, preference will be given to solar power systems with a backup generator.

16.7 Water There is a river that flows through the land and the present facilities are supplied by water facilities in that area. A bigger pump will be available.

16.8 Motor Vehicles Two vehicles should be required one for the food deliveries and another for the visitors. These will be provided by the management of the Rest Camp.

17.0 Management Aspects 17.1 The Management aspects of the Gorilla Trekking Camp

The Forest Camp will be managed by an independent manager or organization. This will follow tendering of the task publically to invite prospective managers or management organizations. The sales and profit projections in this plan will constitute the basis of request for proposals and the tenderers will be requested to prepare their own business plans based on these estimates. The winning organization will be given a contract for a three year period. The contract can be terminated if the organization is not achieving the university goals. There should be a provision for termination of the contract.

The Board of Directors The MUST University Council will constitute a board of directors to oversee the business of the camp. The purpose of the board is to insulate the organization from the bureaucracy of the university which will slow down the organization. Council will vest its powers in the board. The board will consist of 5 people including:

i) The Chief Executive Officer who will be managing the Camp.

ii) The Chairman of the board will be an experienced businessman sourced from outside the university possibly with knowledge in tourism or hotel management or Finance and such related areas.

iii) The third member of the board will also be an external person with knowledge in Law, Accounting, Finance, Hotel management, Human resource management and or tourism.

iv) The university will appoint two members of the university staff to the board preferably one from academic and one from administrative

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who are knowledgeable in the areas of Forestry, Tourism, Veterinary medicine, Accounting, Finance and or other areas that are relevant to the business

v) The members will serve for a period of 4 years retiring intermittently.

Figure 2: Organizational Structure of the Gorilla Trekking Camp

17. 2 Management aspects of the Research Laboratory The Research Laboratory is an academic unit of the university and will be established initially under the ITFC. It will be managed like any other academic unit of the university under existing structures. However MUST has other areas where there is active research being undertaken. The university should support the establishment of independent laboratories in different faculties based on the research competences of that faculty and the resources of the university to support the laboratories.

Operations Manager

Finance Manager

Manager

HR Manager

Board

Council

Finance Manager and HR Marketing Manager Manager

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Figure 3: Organizational Structure of the Research Laboratory

Researcher

Researcher

Manager

Administrator

Dean

17.3 Management aspects of the Business incubator The incubator will be an independent unit of the university and will welcome ideas from the entire fraternity of the university. It will be established at the main campus under the Institute of Management Sciences. The incubator will be managed by an independent Administrator preferably with qualifications and knowledge in entrepreneurship and or related subjects of finance, accounting, marketing and or human resource management.

The university will advertise inviting prospective Administrator who will be requested to tender their proposals based on projection of this business plan. The Administrator will be employed on contractual arrangement. The administrator who will be in charge of the finances and general administration of the unit. Other support staff as required will be availed by the university.

The Steering Committee of the Incubator The incubator will have a Steering Committee consisting of the following: a) The Deputy Vice Chancellor, F&A as Chairman b) 2 Members from Institute of Management Sciences c) Mr. John Baguma Kule d) University Planner

The committee will report to the main MUST AfDB-HEST steering Committee.

Mentors On appointment the manager will constitute a team of mentors who will work with the manager to mentor the incubatees. The mentors will come from both academic staff knowledgeable in the different aspects of business and outsiders who will have experience in different areas of business. The mentees will periodically be constituted in an evaluation team to receive and evaluate business ideas. A total of six mentors will be retained at any one time.

Researchers Researchers

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17.4 Roles of staff in the Organogram

The Business Clinic Steering committee The committee is a policy making body and determines the strategic direction of the incubator.

The Administrator will be in charge of the day to day activities of the incubator and implements the goals and strategies determined by the committee. He/she identifies mentors and assigns them responsibilities. He/she assesses the performance of mentors, receives the business ideas and tables them to both the Board and management

He/she receives the business plans, makes monthly reports to the steering committee, quarterly reports, attends committee meetings and takes minutes.

He/she is responsible for achieving the targets of the incubator

Keeps custody of records including business ideas, business plans, minutes, assets and accounts.

18.0 Benefits of Business Incubators to the Different

Stakeholders Business incubators worldwide have been known to harness potential from different people and to nurture business ideas to fruition. Economies worldwide have numerous challenges including poverty which is related to absence of meaningful activities. The inability to engage into a meaningful employment activity results into unemployment.

Unemployment results up into poverty and a variety of undesirable social ills especially among the youth. These social ills include early marriages, unwanted pregnancies, and exposure to HIV/AIDS, drug addiction, alcohol abuse, thefts and social unrest. Besides this which is typical among young people, unemployment could also be high among older people for instance those laid off as a result of technological changes, those reaching public retirement age and even more specifically among vulnerable groups like the women and the disabled. Business incubators have been seen us an avenue of addressing these challenges in society.

18.1 Benefits of Business Incubators to students Business incubators provide an opportunity to students to think about business ideas early in their educational life with a possibility of mapping out a business undertaking. The incubator enables them to think through business and be able to decide on the option of self-employment.

18.2 Benefits of Business Incubators to the government The incubator is an opportunity to address the challenges of the youth especially reducing the social ills that are related to unemployment among

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the youth. Incubators also enable government to support marginalized groups like government or disabled.

18.3 Benefits of Business Incubators to the private sector The incubator is a source of ideas which have been thought through properly and an opportunity to have the business sector thrive.

18.4 Benefits of Business Incubators to the university The incubator is an opportunity to harness ideas within the community to encourage research and product development, to enable the university relate to the world of work and to enable the university project an image of a major contributor to business and employment in the country.

18.5 Benefits of Business Incubators to the society Incubators are avenues to address unemployment, poverty and the social ills that afflict society when people are idle and unempowered.

19.0 Financials 19.1 Financials for the Gorilla Trekking Camp as per feasibility study

The university will tender out the project to a company that will manage the camp. The university will provide the basic furniture including beds, chairs and tables and the catering equipment. The service provider will provide the beddings and other materials required as working capital items. This includes beddings, toiletries and food supplies. The independent organization that will run the Forest Camp will also acquire the necessary vehicles to run the project. For these reasons, the project costs incomes and cash flows are as below:

19.1.1 Assumptions i) The project will be tendered out to an independent organization. ii) The income is based on the demand analysis done in section 1.5. iii) The organization will pay a compulsory rental value to the university

per month based on the square metres being hired out. Each square metre will cost USD 6 compared to the current market rate of about USD 12 per square metre in down town Mbarara due to its location. This has been separated from the operating expenses and treated as a guarantee fee to the university because it has to be paid whether the independent organization makes profit or not. This figure will be reviewed periodically.

iv) The organization will pay 10% of the income as rental value. v) The university will get royalties of 10% of the net income based on

the targets agreed on. vi) The centre will have a board which will comprise of 5 people. These

will meet on a quarterly basis with a payment of 200$ to the chair and 150$ per member to the other members.

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vii) Operating expenses are estimated at 50% of the projected income given the nature of the industry.

viii) The depreciation rate is assumed at 2.5% on buildings a straight line basis.

ix) Furniture and equipment are assumed to be useful for a period of 4 years and therefore depreciated at 25%

x) The cost of the building is based on the 1910 square metres at a cost of U.S dollars 300 per square metre

xi) Corporation tax is of 30% of net income per annum but is a responsibility of the management company

xii) For the cash flow analysis, the required rate of return of 10% is assumed to take into consideration the inflation rate and the saving fund that will be created as a result of the AfDB fund.

Table 3: Total Project Costs Assets Cost (U.S Dollars)

Land Nil

Buildings 573,000

Furniture and fittings 100,000

Kitchen, bar and restaurant equipment 70,000

Computers 5,000

Incubator 60,000

Means of Funding

ADB (U.S $) 435,000

MUST (U.S $) 373,000 Total cost 808,000

Phasing of the investment

The project will use funds available from AfDB, 435,000 which includes 60,000 for the Business Incubator, and for this reason the project implementation will be in two phases.

Phase 1 Building 265,000 Furniture and Equipment 110,000 Business incubator 60,000 Total 435,000 Phase 2

Building 308,000

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Furniture and Equipment 65,000 Total 373,000 Grand Total 808,000

Table 4: Projected Income Statement Currency US Dollars (AS PER FEASIBILITY STUDY)

Details Year 1 Year 2 Year 3 Year 4 Year 5 Earnings Camp Revenue ($)

1,069,395

1,069,395

1,418,926

1,418,926

1,418,926

Total Revenues 1,069,395 1,069,395 1,418,926 1,418,926 1,418,926

Expenses

Rental guarantee fees

11,460 11,460 11,460 11,460 11,460

Operating expenses 534,697 534,697 709,463 709,463 709,463

Board allowances 3,200 3,200 3,200 3,200 3,200

Depreciation- building (2.5% of 573,000$)

14,325 14,325 14,325 14,325 14,325

Depreciation- others(25% of 175,000$)

43,750 43,750 43,750 43,750 43,750

Total expenses 607,432 607,432 782,198 782,198 782,198

Gross income 461,962 461,962 636,728 636,728 636,728 Corporation tax

138,589

138,589

191,018 191,018

191,018 Net income 323,374 323,374 445,710 445,710 445,710 Royalties (10%) 32,337 32,337 44,571 44,571 44,571 Net Earnings 291,036 291,036 401,139 401,139 401,139

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15.2 Projected cash flow analysis

Table 5: Net Present value analysis Currency US Dollars

Details Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Inflows

Income from Beds 832,200 832,200 1,109,600 1,109,600 1,109,600

Meals 199,728 199,728 266,304 266,304 266,304

Bar ($) 16,644 16,644 22,192 22,192 22,192


Meeting Room 5,200 5,200 5,200 5,200 5,200

Total inflows

1,069,372

1,069,372

1,418,896

1,418,896

1,418,896

Outflows

Initial Outlay 748,000

Cash Operating expenses

534,686 534,686 709,448 709,448 709,448

Rental guarantee fee

12,000 12,000 12,000 12,000 12,000

Board Allowances 3,200 3,200 3,200 3,200 3,200

Royalties 32,337 32,337 44,571 44,571 44,571

Corporation tax 12,571 12,571 17,148 21,725 30,879

Total outflows 748,000 594,794 594,794 786,367 790,944 800,098

Net cash flows -748,000 474,578 474,578 632,529 627,952 618,798

Discounted rate at 10%

1 0.9090 0.8260 0.7510 0.6830 0.6210

Discounted flows (748,000)

431,391

392,001

475,029

428,891

384,273

Net Present value 1,363,586

Table 6: Pay Back Analysis Currency US Dollars

Year Initial investment

Expected net cash flows

Amount recovered

Remaining balance

0 748,000 -748,000

1 474,578 474,578 -273,422 2 474,578 949,155 201,155

3 632,529 1,581,684 833,684 4 627,952 2,209,636 1,461,636

5 618,798 2,828,434 2,080,434 From the financial analysis it is observable that: 1) The project is able to generate a profit right from year one.

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2) Basing on a period of five years, the NPV is positive meaning that the project is viable

3) Analysis of the payback period shows that within five years, the project will recover the initial cost of investment in the 3rd year of operation

19.2 Break Even Analysis

Projects may be viable and generate profits especially when seen from the long term perspective. Such projects may have positive cash flows and a short payback period. However organizations need to establish the breakeven levels such that they are able to establish the lowest volume of production and or sales of a particular product they are offering. This guides the business to know the level below which they should not go. The gorilla trekking camp has accommodation as its main product besides other smaller products like meals, bar and restaurant, hire of meeting rooms. For the purposes of computing the breakeven level we have considered only accommodation for establishing the breakeven level since it is the activity that yields majority of the income for the camp.

Assumptions i) Breakeven point is where total revenue is equal to total costs.

Therefore break even quantity will be equal to total fixed costs/unit contribution

ii) Unit contribution is equivalent to unit price minus unit variable cost iii) Unit price per day is estimated at 100 dollars based on daily income

from occupancy which is the main activity of the business iv) Operating costs are assumed to consist of a 20% component of fixed

costs. Therefore the 80% are assumed to be variable costs and they are based on occupancy rates

v) Occupancy is assumed at 60% for the first two years and 80% from the third to the fifth year

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Table 7: Break Even Analysis

The business will break even at occupation of 10 beds

19.3 Financials for phase one implementation of the business plan While the feasibility study was approved, it was agreed that the project be phased to use the amount of money available from AfDB to complete phase one of the project. For this reason the financials approved then are above. However, for purposes of implementation of the project using the available funds, the financials change by 50% cut as below. The project will be continued as the project generates revenues.

Year 1 Year 2 Year 3 Year 4 Year 5 Fixed costs 20% of operating costs 106939.4 106939.4 106939.4 106939.4 106939.4

Rental guarantee fees 11,460 11,460 11,460 11,460 11,460

Board allowances 3,200 3,200 3,200 3,200 3,200


43,750 43,750 43,750 43,750 43,750


14,325 14,325 14,325 14,325 14,325

Corporation tax 138,589 138,589 138,589 138,589 138,589 Royalties (10%) 32,337 32,337 32,337 32,337 32,337

Total Fixed costs 350600.4 350600.4 350600.4 350600.4 350600.4 Total variable costs 80% of operating costs 427,757.60 427,757.60 427,757.60 427,757.60 427,757.60

Unit variable cost 51 51 39 39 39 Unit price 36500 36500 36500 36500 36500 Unit contribution 36449 36449 36461 36461 36461 Break even quantity 10 10 10 10 10

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Projected income

Item Year One Year Two Year Three Year Four

Year Five


Beds per day 12 12 16 16 16 Revenue from Beds 438,000 438,000 584,000 584,000 584,000 Meals 105,120 105,120 140,160 140,160 140,160 Bar ($) 8,760 8,760 11,680 11,680 11,680 Meals for meetings 15,600 15,600 15,600 15,600 15,600 Meeting Room 5,200 5,200 5,200 5,200 5,200 Expected income 572,680 572,680 756,640 756,64

0 756,640

Income Analysis based on Phase one

Details year 1 Year 2 Year 3 Year 4 Year 5 Earnings Camp Revenue ($) 572,680 572,680 756,640 756,640 756,640 Total Revenues 572,680 572,680 756,640 756,64

0 756,640

Expenses Rental Gurantee fees 5,727 5,727 7,566 7,566 7,566 Operating expenses 286,340 286,340 378,320 378,320 378,320 Board allowances 3,200 3,200 3,200 3,200 3,200 Depreciation- building (2.5% of 265,000$)

6,625 6,625 6,625 6,625 6,625


22,000 22,000 22,000 22,000 22,000

Total expenses 301,892 301,892 395,711 395,711

395,711

Gross income 270,788 270,788 360,929 360,929 360,929 Corporation tax

81,236

81,236

108,279

108,279

108,279 Net income 189,552 189,552 252,650 252,65

0 252,650

Royalties(10%) 18,955 18,955 25,265 25,265 25,265 Net Earnings 170,597 170,597 227,385 227,38

5 227,385

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Cash flow analysis for Phase one

Details Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Inflows

Income from Beds 438,000 438,000 584,000 584,000 584,000 Meals 105,120 105,120 140,160 140,160 140,160 Bar ($) 8,760 8,760 11,680 11,680 11,680 Meals for meetings 15,600 15,600 15,600 15,600 15,600 Meeting Room 5,200 5,200 5,200 5,200 5,200 Total inflows 572,680 572,680 756,640 756,640 756,640

Outflows

Initial Outlay 375,000

Cash Operating expenses 286,340 286,340 378,320 378,320 378,320

Rental guarantee fee 5,727 5,727 7,566 7,566 7,566

Board Allowances 3,200 3,200 3,200 3,200 3,200

Royalties 18,955 18,955 25,265 25,265 25,265

Corporation tax 81,236 81,236 108,279 108,279 108,279

Total outflows 375,000 395,458 395,458 522,630 522,630 522,630

Net cash flows -375,000 177,222 177,222 234,010 234,010 234,010

Discounted rate at 10% 1 0.909 0.826 0.751 0.683 0.621

Discounted flows -375,000 161,094 146,385 175,742 159,829 145,320

Net Present value 413,370

NPV is positive therefore the project is viable

Pay Back Analysis

Year Initial investment

Expected net cash flows

Amount recovered

Remaining balance

0 -375,000 1 177,222 177,222 -197,778 2 177,222 354,444 -20,556 3 234,010 588,454 213,454 4 234,010 822,464 447,464 5 234,010 1,056,474 681,474 Amount will be recovered in the third year of operation

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Break even analysis

Year 1 Year 2 Year 3 Year 4 Year 5 Fixed costs 20% of operating costs 57,268 57,268 75,664 75,664 75,664 Rental guarantee fees 5,727 5,727 7,566 7,566 7,566 Board allowances 3,200 3,200 3,200 3,200 3,200


6,625 6,625 6,625 6,625 6,625


22,000 22,000 22,000 22,000 22,000

Corporation tax 81,236 81,236 108,279 108,279 108,279 Royalties (10%) 18,955 18,955 25,265 25,265 25,265 Total Fixed costs 195011 195011 248599 248599 248599 Total variable costs 80% of operating costs 229,072 229,072 302,656 302,656 302,656 Unit variable cost 52 52 52 52 52 Unit price 36500 36500 36500 36500 36500 Unit contribution 36448 36448 36448 36448 36448 Break even quantity 5 5 7 7 7

19.4 Financials for the Research Laboratory The research laboratory is not an income generating activity and therefore has no income side. The researchers are members of staff of the university who are ordinarily paid a salary. Therefore there is also no need for such extra expenses. However the university needs to commit to itself on funding of research and go an extra mile on funding of development of products as may be necessary. No specific estimates are made for purposes of this business plan since different research projects require different amounts of funding. However we recommend that the university sets aside 300,000,000 (three hundred million Uganda shillings for research per year). This could be reviewed from time to time.

19.5 Financials for the Business Incubator Priority for funding by AfDB is for the incubators. It has been established that the university will provide the buildings for the incubator and AfDB funds should go towards purchase of furniture and equipment. This has been estimated at US Dollars 60,000.

The incubator does not generate incomes especially in the initial years. The income from incubators depends on the policies and practices of the incubator. The incubator may decide to charge incubates a fee for the time spent in the incubator to cover costs of space, mentoring and any other services. The incubator may also choose to get a percentage of the sales revenues of an idea when it starts out and is able to produce commercially. On the other hand the incubator may also choose to collect a dividend from

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shares it may have in a business that has been established from the incubator or royalties. While these may be different sources of income the main objective of these incubators is to address graduate unemployment and this assumes that these graduates who will still be students in the university will not have an income to pay to the incubator for services

The university Council will deliberate on this and we recommend that council should charge the companies emerging from the incubator a small percentage of sales revenues for two years when the business starts and thereafter capitalize its contribution into 10% of equity share capital from which they can earn a dividend thereafter. After 5 years of operation, the company so started from the incubator should buy out the 10% shares owned by the incubator. While there will be no income, the incubator will have expenses. These will include salaries of administrative staff, board expenses, mentors expenses and administrative expenses of electricity, water, stationery and administrative expenses that are ordinarily associated with running of an office.

The incubatees may also have specific requirements of startup especially those that may involve production. These costs cannot be established at the moment however salaries of staff and office expenses along with board and mentee costs are estimated at 15,000,000 (fifteen million Uganda shillings) totaling to 180,000,000/= (one hundred eighty million shillings) annually. An extra 10,000,000/= (ten million shillings) per month will be budgeted for purposes of unique requirements by the mentees to actualize their ideas. This will bring the total expenses for the incubator to shs 300,000,000/= (three hundred million shillings) annually.

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20.0 Implementation of the Business Plan To be able to implement the project, there are immediate actions that need to be taken. An implementation matrix showing the objectives of each phase, the required resources , by whom, the outcome and completion date and a detailed Gantt chart for the different activities is also indicated below.

The Immediate actions

a) Management should table this plan to Council to approve the plan and the decisions in there

b) Management should take the initiative to recruit the necessary organizations and personnel after approval by council

c) Management should initiate the procurement process for the building construction and equipment acquisition

d) Management should take the decision to engage the organization to run the trekking camp

20.1 Implementation of the business plan for the Gorilla Trekking

Camp The implementation of the Gorilla Trekking Camp is a four stage process including the following:

a) Construction of Building and furnishing and equipping the Trekking Camp

b) Procurement of Organization to run the Trekking Camp c) Appointment of Board of Directors d) Operation of the Camp

Stage One Construction of Building and furnishing and equipping the Trekking Camp

Objective Resources Required By Whom Outcome

Completion Date

To construct the bandas and other rooms and the trekking camp and furnish and equip it

Council authority and council resolution, availability of AfDB funds

University secretary’s office and AfDB/PSFU Liaison office

Trekking camp facilities, bandas, other rooms constructed furnished and equipped.

July 2016

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Stage Two Procurement of Organization to run the Trekking Camp


Completion Date

To procure an organization that will run the camp efficiently and competitively

Council authority, council resolution and funds to advertise the request

University secretary’s office and AfDB/PSFU Liaison office

A competent Private organisation contracted to run the trekking camp

June 2016

Stage Three Appointment of Board of Directors


Completion Date

To secure an efficient and independent governing body that will oversee the activities of the trekking camp and give policy directions

Council resolution and funds to advertise as necessary

By the University Sectary’s Office with liaison with ADB/PSFU Office

A professional board constituted

July 2016

Stage Four Operation of the Camp


Completion Date

To create awareness among the tourist fraternity of the availability of the trekking camp facility

Commence the operations of receiving tourists at the camp

A managing company in place, resources secured

The independent management company

An operating trekking camp facility

November 2016

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Gantt chart for the Gorilla Trekking Camp (to change according to above timelines) With the above implementation matrix each activity is broken down below showing detailed period of implementation.

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20.2 Implementation matrix for the Research Laboratory Objective Resources

Required By Whom Outcome Completion

Date

To establish physical laboratories and a research culture within the university

availability of AfDB funds, researchers and Council Resolutions

University secretary’s office and AfDB/PSFU coordinating office and Deans of relevant Faculties

A thriving research culture improved teaching and new ideas and knowledge

Continuous

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Gantt chart for the Research Laboratory

20.3 Implementation matrix for the Business Incubator

To implement the business incubator, there are three stages required as below: a) Commencement of operations b) Constitution of management c) Commencement of the actual activities

Stage one Commencement of operations of the Business Incubator Objective Resources


Date

To set up a business incubator through acquisition of space within the university and the necessary equipment

Council authority and council resolution, availability of AfDB funds

University secretary’s office and the independent manager recruited

Adequate facilities to run business incubation services

April 2016

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Stage Two Constitution of the board and identification of management Objective Resources


Date

To secure a efficient management/steering committee that will oversee the activities of the business incubator

Appointments Deputy Vice Chancellor F&A

Incubator steering committee appointed

April 2016

Stage 3 Commencement of the actual activities Objective Resources


Date

Have a fully operational business incubator

Independent manager, equipped facility, mentees and business ideas

The independent Administrator and Steering Committee

Fully operationalized business incubator

July 2016

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Gantt chart for the Business Incubator

Appendices (Extracted from the feasibility report)

Appendix I 1.0 Mbarara University of Science and Technology (MUST)

MUST was established in 1989 and is one of the eight public universities and degree awarding institutions in the country. It is located in Mbarara town in the South Western part of the country. The University was founded primarily as a University of Science and Technology. It has over 3,000 students and seven Faculties and Institutes.

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1.1 Staff of the University The University employees 506 staff members of which 227 are academic and 279 are non-academic.

1.2 Students of the University Table 1 – Students of MUST

Year Number of students 2012 2,890 2013 3,096 2014 3,681

1.3 Management and organs of the University

The University is administered by three bodies, that is the University Council, the University Senate and the top management. The University Chancellor is Prof. Ndimbirwe Mugyenyi and the Vice Chancellor is Prof. Celestino Obua.

1.4 Programmes offered at the University The University offers over 38 both post graduate and undergraduate programmes of which over 12 are undergraduate, 20 Masters and 6 are Doctorate programmes.

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Appendix ii 2.0 The African Development Bank (AfDB) HEST Project

The African Development Bank (AfDB) loaned funds to the Government of the Republic of Uganda to support Higher Education Science and Technology (HEST). This is now a project administered by the Ministry of Education and Sports (MOES) to contribute to the country’s skill development capacity particularly in science and technology. The project is intended to improve the quality of education in these areas besides creating skills among science and technology students with a view to improving research, job creation and self-employment. The project is supporting the six public universities and the two Government institutions that prepare students for degree awards. As part of this project, AfDB found it useful to encourage public universities to consider alternative sources of funding for the activities in light of declining resources from Government.

The Bank also expressed the need to consider incubators as likely sources of funding for universities especially where research is a source of ideas that are incubated to turn into products. AfDB engaged Private Sector Foundation Uganda (PSFU), an apex body in the private sector to manage the process of conducting feasibility studies for ideas that may enable universities to possibly undertake income generating activities or to establish incubators that will enable the universities to channel their research and turn them into viable commercial activities.

2.1 AfDB HEST Project Objectives and Components The support to Higher Education, Science and Technology (HEST) project aims at contributing to building Uganda’s human capital skills development capacity, particularly in education, science and technology in order to respond to labour market demands and spur productivity. Its objective is to improve equitable access, quality and relevant skills training and research leading to job creation and self-employment. It involves active participation of six public universities and two degree awarding tertiary institutions in skills training at the various levels of higher learning. The strategic outcomes of the project are;

a) Increased access to higher education, science and technology and information technology.

b) Improved quality and relevance of HEST in targeted public universities and tertiary degree awarding institutions leading to stronger links to the productive sector. The project is aligned to the country’s National Domestic Plan (NDP 2010/2011 to 2014/15) as well as the Uganda Vision 2040.

2.2 The Private Sector Foundation Uganda (PSFU) The Private Sector Foundation (PSFU) is a body that brings together associations in the private sector that was founded in 1995 with a view to

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supporting private sector growth. It is thus an apex body in the private sector and has over 180 business associations and also includes major public agencies and corporate bodies that support private sector growth. It was established as an advocacy body to be able to present the views of the private sector to Government as it formulated policy that promoted business growth in the country. Given its position in the economy, it has partnered with different organizations including Government, foreign development agencies and banks to implement projects that strengthen the private sector. PSFU was selected by the AfDB as a partner to implement part of the HEST project that is intended to not only promote the private sector through research but also to empower public universities to consider alternative sources to fund their activities.

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Appendix iii

The Business Incubator and Research Laboratory 3.0 Business Incubators

Business incubators have developed overtime as organizations that nurture and support starting and growing of businesses. They help vulnerable businesses and business people to start, grow and survive through the difficult stages of a business. They have largely been associated with small businesses started by novice entrepreneurs. They may be supported by government, private companies, colleges and universities as a forum where young people with ideas are supported in start-up. The overall objective of business incubators is to encourage those with ideas but have no way of actualizing them to start businesses.

Incubators support entrepreneurs by providing a variety of services. This could include physical space, finance, coaching and various business advice. Usually those who want support from the incubator request to join and the main support they get from the incubator is to enable them startup businesses.

Incubators help entrepreneurs by availing them with space at a low cost or no cost at all. They help them draw up business plans, raise finance or access bank loans, enable them network with people, avail accounting services, identify strategic partners, give them advice through advisory boards or mentorship programmes and help businesses comply with various legal requirements that a specific environment may have. Incubators help in the start-up process and when business starts, they may help scale up growth of the business.

The importance of business incubators lies in its social economic benefits to society. The key benefits include addressing unemployment through job creation, nurturing entrepreneurs, improving the entrepreneurial climate, commercialization of new technologies and encouraging specific communities to enter business and a variety of other social economic objectives.

Universities may have research laboratories and/or technological parks or business incubators. Research laboratories are arenas where professors undertake research and make experiments that may include producing proto types of products. Universities may have an innovation parks, like laboratories, innovation parks are where new ideas are generated and translated into products

3.1 Business Incubators in Universities Because most incubators are funded by governments or private businesses, incubators in universities have not been common. However in recent years universities have established incubators. Ordinarily, Universities have innovation parks where research ideas are encouraged as outputs from

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professors. The commercialization of these ideas is the role of incubators. Universities therefore normally support innovations from research and take innovations through commercialization, startup and scaling up. Some universities have got incubators as known but instead of encouraging the general public, they encourage only their students to generate ideas that can be supported through the incubation process. Business incubators are support centres for business ideas where ideas are nurtured and supported to transform into businesses. The AfDB thinking is that research from university professors should be converted into business ideas that can be nurtured. Those who translate ideas into products or services are usually entrepreneurs. MUST University is not very strong in entrepreneurship research, education and training and yet the incubator requires this knowledge in the process of transforming research. It is therefore recommended that MUST University will establish a business centre as an incubator. The business centre will act as a collection point for ideas in the university from the ITFC Laboratory, medical school and any staff or other students who may have that they want nurtured.

The business centre also called the MUST University Business Incubator will be an independent unit established primarily to support the process of incubation. The business incubation process will therefore have the laboratory which is a unit in the ITFC and will be open to students and staff from the university.

3.2 Objectives of the MUST Business Incubator The overall objective is to encourage the development of entrepreneurs and support business startups.

a) To encourage research in the tropical forest laboratory and medicine b) To attract generation of ideas c) Provide space for people with ideas d) Nurture ideas e) Support start up f) Provide facilities for start ups

3.3 Activities of the MUST University Business Incubator

a) To encourage research in the tropical forest laboratory and medicine The overall goal of the incubator is to support the university's goal of improving the community through business start-ups. Special emphasis will therefore be given to the ideas coming from the ITFC and medical school laboratory. The incubator will work with these labs to generate products. MUST is already exploring medical products with universities in the U.S and has been able to patent a drug. Nonetheless, the incubator will

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also encourage ideas with other people. From this it will be able to generate medicinal herbs for the incubator.

b) To attract generation of ideas The incubator will hold periodical seminars on how to generate business ideas working with students and staff of the university for the purpose. It will also promote idea generation through publication of its activities. The Centre will hold periodical business plan competition as part of this effort.

c) Provide space for people with ideas The incubator will have offices and workshops for use by the incubatees. The offices will be used by these whose business ideas are still at a conception phase who will simply want a place to think. A creative room where people can just think about things will also be part of the built up areas. The workshops will be places where those with ideas that require physical space will work from to produce their products which they have thought about.

d) Nurture ideas The incubator will through provision of space support the development of ideas into products. This will involve enabling prototyping, seeking funds for prototypes, providing start-up advice on legal form and sources of finance.

e) Provide facilities for start ups The incubator may provide physical space, equipment like computers, photocopiers, workshops for prospective start ups

3.4 Operations of the Incubator In the initial stages, the incubator will be limited to receiving ideas and supporting these ideas and start up from only the MUST students and staff. The incubator will invite staff and students who have business ideas in terms of project concept. The concept will be assessed by a team of individuals who will then advise on the next stage of preparing a product prototype where applicable. After the product prototype, the prospective business person will be guided in preparing the business plan for the project. During the period of preparing the business plan, various services will be availed to the incubatee. On completion of the business plan, the committee will then assess the continued need for the business idea to take it to the next stage for commercialization. At that moment, the incubatee will be availed space in form of office space or workshop space to enable him or her to commercialize the idea. Through the committee of the incubator, the incubatee will be guided on where to find the finances or provided with the finances for startup.

The incubatee will stay for another 6 months to one year as the business is operationalized. The committee will review the progress of the incubatee on a monthly basis, identify bottlenecks and arrange solutions.

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The requirements of the business incubator include the following:

i) Furnished Office space for 10 people ii) An industrial workshop for 10 ideas iii) Creativity room iv) Availability of electricity v) Internet connection vi) 10 computers

3.5 Facilities and Funding of the incubator

The university will initially identify office space for the management of the incubator. To fully establish the incubator, the university will require the above items.

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Appendix IV

Accommodation Facilities for the Gorilla Trekking Camp

Types of Rooms Quantity of rooms

Area (square metres)

Total area

Single bed self-contained 15 22 330

Double bed/Twin bed 15 36 540

Apartment type of bandas with a kitchenette and spacious working area.

10 45 450

Workers ordinary house 10 22 220

Restaurant 1 150 150

Bar 1 50 50

Kitchen 1 50 50

Meeting rooms 2 60 120

Total 1,910

research laboratory and business incubator business...

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