Coconut Sagas

As some of you may recall, we helped start a cold pressed coconut oil business back in 2006 with a startup donation from some of our friends at Harvest Community Church. World Relief supported the idea and a WR manager (who was approaching retirement age and from that community) agreed to take the managing partnership role.

Producing liquid, white gold (from a tree no less)

Needless to say, it has been a live, learning curve in action from day one. I could go on, but needless to say, the first 7 years we lost money, maybe broke even the next and actually made a profit last year (if the books are to be believed, since they got done after the fact from a year’s worth of records). This alone is a series of sagas that could at times turn one prematurely gray!

So, we wrapped up production in December with my requesting they buy a few more coconuts at higher prices so that I can have some oil to sell in the off months. (Which they don’t. Prices were too high and they were too tired.) Then in early January, our manager says he and his wife have made a decision that he would retire this year and sell the factory. Wow, just like that, no discussion, questions or what do you think about this idea, Steve?

Well, we need a new manager and likely some new partners/investors in the mix if we want to move forward with production, growth and innovation. So, I share/shop the idea around to about six different parties that I know of who are either doing coconut oil, buying from us, selling oil, or want to sell it.

One comes back right away with, “Sure, I want to rent your factory for the next year and make oil. Here is my proposal.” Well, we had enough experience with this person to believe the offer was about 95% likely to fall flat before getting out the door, so I said, “Give us a written proposal, not just discussion” and that was just about the last of it, except a phone call to say, “No longer interested’ about 4 weeks later.

Another says, “Here is my idea/proposal, I bring you the coconuts (since I am starting similar operations across the street), you process and sell me your oil.” Our manager is convinced this is it, the answer to all his problems! Raw materials and export are covered, just run the factory. (I am not. What happens to our current customers who are depending on us for supply?)

Two more candidates who are actually working in the area with coconut products, have serious and real responses. Can we see your books and what would you charge for the company? Here’s the rub, no books since last year. How long to whip things into shape? Four weeks. That feels like a life time, even in the off season for a businessman. So, we wait. Once the books come out, we get verbal confidentiality agreements and share the data. How do they look? Not good, not terrible, so we have to think about selling this thing on its potential, not its actual profitability and return on investment, which is reasonable based on high demand from current customers, new people asking monthly and not being able to keep product in stock.

However, the price is just too high “for now.” We really need another year to make improvements, add capacity and build up revenues. What to do? Partnerships, alliances, new leadership, investments are all possible if we pursue and agree. So, we keep talking seriously to the two most likely candidates. One is like minded, business as ministry, the other community minded and profit driven.

New bombshell, the manager is selling his house and moving out of the community, even Mozambique. Wow, so much to not like about that unilateral decision. What to say or not say? We spend 2-3 days exploring options and talking about it. (I need to travel for two weeks now.) Ok, he will stick around until end of April. Lots of direction to pray for here. What is best for the company, him, us, the community, the business?

Talking to a close friend and advisor from our sending church, we ask these questions and receive the response, “You need to decide if the primary focus is ministry or business. I have seen each doing the other, but the primary focus must be agreed and done, or the other will interfere and create confusion.” True, we have seen that many times. Good food for thought. Primary goal has to be make a profit. Once this is sustainable, then as one producer said, the jobs will come (and so will opportunity for ministry.) The big outstanding question is now, how to structure the management, which partner to help us and who to hire for this year?

New bombshell (one that is easier to live with), the manager has decided not to leave Mozambique and wants to stay involved. Now the question is, how to move forward with the current limitations of present leadership? (So, my own advice comes back to remind me that, “If it were not challenging, it would not be called business!”) The saga continues……… (with hope).