Cigar Box Method
The Cigar Box Method is a toolkit which consists of a series of spreadsheets to help entrepreneurs, notably those in agrobusiness in emerging markets, to calculate the costs of goods, margins, contribution, break-even volumes and profitability. It can be used for a single product or a complete portfolio of products. There are 6 Cigar Box (CB) categories:
- CB1: cost price for one single product,
- CB2: contribution for a range of products,
- CB3: daily monitoring of cost price for a range of products,
- CB4: investment and finance projections with yearly cash flow,
- CB5: cost price based value chain analysis,
- CB6: invoicing and sales analysis.
The Cigar Box Method has been developed by Olivier van Lieshout and Orlando van Geuns, and is actively being used by agro-entrepreneurs in Romania, Armenia, Central Asia, Bangladesh, Senegal, Guinea, Benin, Kenya, Tanzania, Jamaica and Argentina. The method derived its name from Dutch pioneers in the 17th Golden Century who were discussing foreign business deals while sipping coffee and smoking a cigar. When they needed to make quick business calculations, they often used the bottom side of the cigar box to convince investors about the profitability of their business ideas in a quick, concise and convincing manner..
History and Current Use
The method was first used in 1999 as an analytical tool during a course on foreign direct investment (FDI) at the Wageningen University. It analyzed the suitability, including a risk analysis and potential benefits, of specific agricultural production processes for foreign investors. Between 1999 and 2008 over 150 students were trained in the use of the Cigar Box Method. It has since developed into a fully fledged business analysis tool with multiple purposes and used by various targets groups: as analytical tool for foreign investors and bankers, as business planning tool for fruit and vegetable processing factories and business development service providers. An adapted version for women entrepreneurs in Africa has been developed recently. The method is described in the Agribusiness Handbook for Fruit and Vegetable Processing published by the Food and Agricultural Organization (FAO).
The Cigar Box Method consists of only five parameters:
P = Price (per unit), VC = Variable cost (per unit), FC = Fixed cost (per unit), q = Quantity, t = Tax (as % of profit).
More specifically, in (food)processing business, there are three types of Variable Cost: VC1 = Raw Materials and Ingredients, VC2 = costs of processing inputs into outputs, VC3 = costs of packaging materials. The Fixed Cost (FC) are also divided into three types: FC1 = depreciation of fixed assets, FC2 = interests paid, FC3 = overheads (salaries, transport, maintenance, marketing, ...). Using the 5 parameters and their sub-components in simple formulas, a trained person can do a Cigar Box Method analysis in half an hour, even when data are missing - assuming educated guesses regarding missing data.
The Cigar Box Method is an Excel-based model, and can be used even by Excel-beginners. Only one spreadsheet is needed per product. The Cigar Box Method purposely does not make use of specific software, to enable its easy spread worldwide. The Cigar Box Method is free for anyone who is interested in it and is currently available in English, French, Russian and Spanish.
Wikimedia Foundation. 2010.
Look at other dictionaries:
Cigar — For other uses, see Cigar (disambiguation). From the Spanish cigarro cigar , which was perhaps derived from the Spanish cigarra cicada (OED) … Wikipedia
Smoking — For other uses, see Smoking (disambiguation). Part of a series on … Wikipedia
Juggling — is a physical human skill involving the movement of objects, usually through the air, for entertainment (see object manipulation). The most recognizable form of juggling is toss juggling, where the juggler throws objects through the air. Jugglers … Wikipedia
Cabernet Sauvignon — Infobox grape variety name = Cabernet Sauvignon color = Noir caption = Cabernet Sauvignon grapes species = Vitis Vinifera also called = Bouchet, Bouche, Petit Bouchet, Petit Cabernet, Petit Vidure, Vidure and Sauvignon Rouge origin = Bordeaux… … Wikipedia
White Owl — White Owls are American made, machine produced cigars.cite web | url = http://www.owlpages.com/the owls/White+Owl+Cigars.html | title = White Owl Pages | publisher = Meta Wiki | accessdate = 2007 07 12 | date = 2007 07 12] White Owl cigars are… … Wikipedia
Matchbox (toy) — Matchbox is a die cast toy brand currently owned by Mattel, Inc. Matchbox toys were so named because the original models were packed in boxes similar in size and style to boxes of matches. The series became so popular that the Matchbox name was… … Wikipedia
Matchbox (brand) — For other uses, see Matchbox (disambiguation). Matchbox Type Die cast toy Owner Mattel, Inc Country Origin Lesney, England Current U.S … Wikipedia
Table tennis — Ping Pong redirects here. For other uses, see Ping Pong (disambiguation). Table tennis Table tennis at the highest level Highest governing body ITTF Nickname(s) Ping pong … Wikipedia
V.F.D. members — In the children s novel series A Series of Unfortunate Events by Lemony Snicket, many characters are members of a secret organization known as V.F.D. The following is a list all of the known members of V.F.D. Contents 1 Members 1.1 Beatrice… … Wikipedia
David Brewster — Born 11 December 1781 Canongate, Jedburgh, Roxburghshire … Wikipedia