Professional Documents
Culture Documents
Chapter One Executive Summary
Chapter One Executive Summary
EXECUTIVE SUMMARY
1.0.0 INTRODUCTION
This chapter gives the summary of all activities that have been carried out in the
business plan. The name of the business will be WAN COMMUNICATIONS and will
be dealing with selling, installation, repair and maintenance of communication
equipment. The form of a business will be sole proprietorship owned by EDWARD
OMONDI KASUKU.
1
The business will advertise its products through:-
i. Posters.
ii. Television stations.
iii. Radio.
iv. Newspapers.
v. Magazines.
Due to high competition in the market WAN COMMUNICATIONS will ensure that
employees will be motivated through:-
2
services offered. WAN COMMUNICATIONS will ensure that all people despite their
status are catered for. Hence the business will offer services at a fair price to its
customers.
3
CHAPTER TWO
BUSINESS DESCRIPTION
2.0.0 INTRODUCTION
WAN COMMUNICATION will be a sole proprietorship form of business, operated by
Edward Omondi Kasuku. It will be located in Kapsabet Town Centre, opposite the Bus
Terminal. It will operate by the name WAN, which is an abbreviation for the phrase
“Wide Area Network Communication.”
The official contacts will be:-
WAN COMMUNICATIONS,
P. O. BOX 32,
KAPSABET.
TELEPHONE: - 0729760112
E-mail: edwardomondi84@yahoo.com
4
On completion, he was posted to N.Y.S Athi River Filed unit where He served as a
radio operator for one year.
In January 2008, He joined N.Y.S Engineering Institute to study Diploma in
Telecommunication Engineering, for three years.
Despite being trained as a Technician, Edward would like to use gathered and
sharpened in various enterprises to start up and run a business successfully, exploit the
available natural resource in order to boost his income, as well as create employment
in the telecommunication industry.
5
2.0.5 FORM OF OWNERSHIP
The enterprise will be a sole-proprietorship. This form of business will be chosen as it
has the following
Advantages
(i) Easy to start.
(ii) Needs few legal requirements to initiate.
(iii) Be the sole decision maker.
(iv) Enjoy all the profit.
(v) Enjoy being his boss.
(vi) Faster decisions making.
Disadvantages
(i) Contribute all the capital.
(ii) Bear all the risks.
(iii) No specialization
6
Today, the industry uses 3G technology with fairly robust gargets, enhanced data and
voice communication speed of communication. These devices support several
communication modes unlike the previously used. The key players in this industry
currently are:-
(a) Computer firms e.g.
(i) Star-Com
(ii) Hp
(iii) Dell
(iv) IBM,
(v) Huawei,
(vi) Alcatel
(vii) Eriksson
(viii) Siemens e.t.c.
(b) Telecommunication firms
(i) Safaricom
(ii) Zain
(iii) Orange
(iv) Telecom Kenya
(v) Essar Kenya (YU)
(vi) Wanainchi online
(vii) Kenya Data Networks (KDN)
(viii) Access Kenya
(ix) Africa online
(x) Broadcom ltd, e.t.c.
(c) Radio and T.V station such as;-
(i) K. B. C
(ii) Kiss100
(iii) Nation Media
(iv) Royal Media Services e.t.c.
7
2.0.8 BUSINESS GOALS AND OBJECTIVES
a) Short term
To make profit, enhance high level of ethics, excellence, innovation and integrity by
being courteous to all customers at all times.
b) Medium
To improve service delivery in the industry by utilizing the new technologies that are
more efficient in cutting operation costs and bringing better services to customers.
c) Long Term
To be a premier firm that introduces new technologies to the market, with a balanced
approach towards people, offer quality services and to achieve wide profit margins.
GOODS
b Mobile phones
C Phone Covers
d Phone Batteries
e Phone Chargers
f Memory Cards
h Radiation Reflectors
j Networking Cables
k Routers
m Modems
o U. P. S
8
SERVICES
a Repair
b Maintenance
d Networking
e Installation of antennae
9
2.1.1 ENTRY AND GROWTH STRATEGY
a) Entry
The proprietor will exploit the fact that competition is healthy to customers. He will
sell goods and offer services at a lower cost and charge compared to its competitors,
but at a profit. All the prices and charges will be reasonable with all customers needs
catered for to maintain and attract more since the business needs to grow. Goods and
services will be of best quality. There will be special opening offers, extensive
advertisements through road shows, billboards, handbill, and mass media.
b) Growth Strategy
The owner will facilitate the growth by expanding the market through sales
representatives and distributors to sell items directly or indirectly to the outside market
for two years. He conducts frequent market survey by approaching his competitors as
clients and accessing their products and service demand. Any realized and unsatisfied
demand will be exploited for the growth of this venture.
In future, he will install computerized systems to improve efficiency at work. This will
result in:
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CHAPTER THREE
MARKETING PLAN
3.0.0 INTRODUCTION
This chapter outlines how the proprietor will popularize the business and his plans on
handling the already existing competitors and customers to ensure success.
3.0.1 CUSTOMERS
(a) Learning Institutions
Will include schools with computer laboratories which are:-
Kapsabet Boys,
ST Mary’s Girls
ST Peter’s Boys.
Modia Computer
Sunshine 1994
Keben Hotel
(b) Companies
11
These will includes firms within the defined market that will require communication
links for effective day-to-day business. Are to include:-
(i) Chebut Tea Factory
(ii) Kamobo Tea ltd
(iii) Nandi Tea Factory
(iv) Jego Milk Processing Plant
(v) Timsales sawmill
(c) Commercial customers
These are to include existing cyber café and communication beurrals. Examples
identified are: -
Upland Communication
Motherland Computers.
(d) Individual Households
These will include any customer other than the above outlined, who require products
and services in-order to satisfy personal communication needs. There are expected to
purchase more during November to January, May and August.
12
TOMCOSSAFAR
DISTRIBUTORS
Market size is expected to grow with advancement in information technology and
penetration of the market by new mobile telephone communication companies such as
Orange, Telecom Wireless and YU.
3.0.3 COMPETITION
The venture will face competition mainly from:-
(a) TomCos Safaricom Distribution
This competitor is located 420 meters from the intended premises.
(b) Burgei Communication
TENOKWEBEURRA
This is situated just opposite the enterprise. The proprietor of WAN Communication
worked there as an employee. It’s old and established but not expanding over a long
22%
period of time.
13
(a) Reluctant staff at the customer desk.
(b) High prices and charges
(c) Lack of professional Technicians
(d) Time unconsciousness in product and service delivery
(e) Delay in adopting new technologies
14
COMPETITOR ANALYSIS TABLE
15
A. Coping with competition
Wan Communication will diversify in terms of products and services to meet all the
communication needs of all customers, unlike the competitors who are specialized on
only one product; either Zain Kenya or Safaricom products.
There will also be related services offered to customers and such to include;-
(a) Structure and Cabling
(b) Networking
(c) Configuration and setting
(d) Maintenance and repair
• The business will reduce prices on goods and charges on services by at least
2% of that charged by the competitors so as to woo a large number of
customers.
(ii) Delay in services and product delivery
• The business will have adequate number of motivated staff, who is energetic
enough to actively serve all customers at immediate time of need.
• The business will be offering original products and high quality services.
• Where necessary the product will be tested for the customers for free before
carrying it way from the premises to assure them of the quality and
effectiveness.
• After sales services/ guarantee will also be provided for goods bought at the
enterprise on specified terms.
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• Computerized systems will also be adopted for high efficiency.
• The proprietor will ensure there is proper coordination and handling of all
business activities to ensure smooth and continuous running of the firm. This
will ensure the customers are attended to all seasons.
The owner of the business will provide quality products for sale. She will not deal with
counterfeit goods, which are cheaper. She will rather sale authentic merchandise at a
reasonable price.
The owner of the business will offer credit facilities to customers whom she trusts and
well known to her. Credit facilities will be limited to certain amounts depending on the
customers.
This is meant to ensure that the customers puts the most skillful workers in the
business who will render efficient services to their customers by proper delegation of
duties to workers and ensuring that each participates fully for the business property.
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This will be through advertising the business in the Daily Nation and Standard Nation
magazines, signboards to create awareness of the business existence, product and
services offered and create anxiety to customers who want to know what is being sold
and its uniqueness.
v .Company Uniform
Employees shall report early to work, at workplace they will wear uniforms bearing
the name “WAN COMMUNICATIONS, WE DON’T JUST SELL, WE CONNECT
WORLDWIDE”.
He will be also able to scan the environment of the market and know the products that
are fast and slow moving and prioritize them accordingly and know the customers
favors to cater for them effectively.
18
Discounted prices will also be given to all customers at appropriate time, especially on
cash purchase of goods during festive seasons.
h Radiation Reflectors 70
k Routers 3000
19
l Switches And Hubs 1,500
m Modems 2,999
o U. P. S 1,800
a Repair 1,500
b Maintenance 2,500
d Networking 1,500
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3.0.6.2 SALES TARGET TABLE FOR 1st YEAR 2011
ITEM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL SALES
Office phones - 8,400 9,200 10,700 10,000 10,800 10,500 12,000 11,200 11,500 11,650 11,700 117,650
Mobile Phones 3,800 - 4,100 5,500 5,800 6,000 6,700 7,000 6,900 7,400 7,400 7,500 68,100
Phone Batteries 300 1,250 1,500 1,750 1,800 1,500 1,400 1,800 - 1,250 1,400 1,500 15,450
Phone Chargers 150 900 - 1,200 1,100 1,000 900 1,200 1,500 - 1,500 1,200 10,650
Memory Cards 450 1,300 1,200 2,000 - 650 500 1,200 1,300 1,500 - 1,300 11,400
Radiation Reflectors - 200 500 - 400 150 - 200 500 400 251 400 3,001
Networking Cables 1,500 - 1,500 3,000 3,200 - 2,500 3,200 2,800 3,200 3,000 - 23,900
Routers 3,200 - 6,200 7,200 7,000 6,400 6,200 7,000 7,200 6,200 6,400 3,200 66,200
Switches $ Hubs 2,200 6,600 - 5,000 5,800 5,400 5,200 5,800 5,400 2,200 - 5,200 48,800
U.P.S 2,900 - 2,400 - - 2,600 - 2,900 - - 2,400 - 13,200
Modems 4,000 7,000 6,000 7,000 7,200 8,000 7,200 7,500 7,500 12,650 12,500 11,000 97,550
Repairs - 2,350 - 2,880 2,000 3,000 - - - - - 3,600 13,830
Maintenance - - 2,600 2,500 2,500 - 2,500 2,500 3,600 2,500 2,500 2,500 23,700
Configurations 1,500 1,500 5,500 1,500 - 1,500 1,500 - 2,600 2,600 2,800 2,500 23,500
Installation - 5,500 - - 5,500 7,100 5,500 5,500 5,500 7,500 7,100 7,500 56,700
TOTAL 20,000 35,000 40,700 50230 52300 54100 50600 57800 56000 58900 58901 59100 1,594,281.00
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3.0.6.3 SALES TARGET TABLE FOR 2nd YEAR 2012
ITEM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
SALES
Office phones 13,800 13,500 12,500 13,000 12,800 13,800 15,480 15,400 17,000 16,500 16,900 17,400 178,080
Mobile Phones 8,500 9,000 9,700 10,500 11,000 11,700 12,800 12,980 13,800 14,000 14,800 15,000 143,780
Phone Batteries 2,000 1,700 - 1,800 - 2,000 2,900 - 3,800 3,600 3,800 3,900 25,500
Phone Chargers 1,500 1,200 1,500 1,500 1,200 2,050 1,500 - 1,200 1,450 - 13,100
Memory Cards 2,500 2,800 3,200 2,900 3,700 - 3,400 3,800 2,900 3,400 3,800 3,950 36,350
Radiation Reflectors 400 - - 740 1,200 - 700 1,200 1,280 - - 1,200 6,720
Networking Cables 3,800 3,650 3,978 2,992 - 3,899 4,049 3,848 4,399 3,800 3,900 4,066 42,381
Routers 3,200 3,800 3,600 3,400 3,800 4,000 3,200 3,800 4,000 4,300 4,500 41,600
Switches $ Hubs 2,200 3,000 4,700 6,600 3,400 3,000 6,600 4,400 6,600 6,500 - 6,800 53,800
U.P.S - - 3,800 3,600 3,200 3,400 - 3,200 3,600 - 4,200 4,300 29,300
Modems 7,500 8,000 7,500 7,200 7,500 8,000 12,000 11,000 12,900 12,000 12,500 13,200 119,300
Repairs 3,600 3,800 - - 4,573 3,800 4,500 - - 3,633 3,972 4,100 31,978
Maintenance 2,700 2,600 - 3,200 6,500 5,700 - 5,600 5,700 4,000 3,900 - 39,900
Configurations 2,800 3,200 3,800 6,100 5,000 7,500 6,100 - 6,000 6,200 6,500 53,200
Installation 7,500 6,500 7,500 7,500 - 5,500 13,000 13,000 13,000 13,700 13,500 9,750 110,450
TOTAL 62,000 62,750 61,778 63,432 65,273 70,999 84,979 85,228 88,779 92,333 93,222 94,666 2,005,139
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3.0.6.4 SALES TARGET TABLE FOR 3rd YEAR 2013
ITEM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
SALES
Office phones 17,45 18,00 18,40 18,20 19,30 19,700 18,800 19,900 19,900 20,200 21,300 26,900 238,050
0 0 0 0 0
Mobile Phones 15,00 15,10 15,40 15,20 16,50 17,200 17,300 17,600 17,900 18,300 19,600 24,900 210,000
0 0 0 0 0
Phone Batteries 3,900 3,800 4,200 4,500 4,500 - 4,400 - 4,500 4,700 5,300 6,950 46,750
Phone Chargers - - 2,800 - 3,000 3,200 3,300 3,700 - 3,200 4,500 6,800 30,500
Memory Cards 3,950 3,900 4,300 4,500 4,800 4,900 4,700 4,900 5,000 5,100 6,200 7,950 60,200
Radiation Reflectors 1,200 - 1,420 1,200 - - 1,400 1,680 1,600 1,630 - - 10,130
Networking Cables 4,066 4,040 - 4,262 4,440 4,783 - 4,800 4,900 5,370 5,987 8,978 51,626
Routers 4,500 4,200 4,800 - - 4,600 4,800 5,200 5,100 - 5,600 7,500 46,300
Switches $ Hubs 6,800 6,500 6,800 6,700 6,800 7,000 6,500 7,200 7,300 7,500 7,900 9,600 86,600
U.P.S 4,300 - - 4,500 4,600 - 4,000 - 3,500 4,600 4,800 6,400 36,700
Modems 13,20 13,30 13,50 13,40 13,70 13,800 14,100 14,700 14,600 15,100 15,200 18,900 173,500
0 0 0 0 0
Repairs 4,100 4,400 4,200 4,300 4,200 4,240 4,344 5,745 5,433 5,936 6,000 7,787 60,685
Maintenance - 2,500 4,300 4,800 4,900 5,000 - 5,500 5,600 - 5,800 7,300 45,700
Configurations 6,500 6,500 5,600 - - 4,900 5,100 - - 5,400 5,400 7,100 46,500
Installation 10,89 9,900 12,50 11,60 12,60 12,900 12,700 12,900 13,000 13,200 13,300 16,500 151,990
0 0 0 0
TOTAL 95,85 92,14 98,22 93,16 99,34 102,22 101,44 103,82 108,33 110,23 126,88 163,56 2,895,231
6 0 0 2 0 3 4 5 3 6 7 5
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3.0.7 PROMOTION AND ADVERTISING
During the early stages will advertise goods and services extensively to create awareness of
its existence to the general public. It will also employ such techniques to influence the
attitude and behavior of customers to buy more from this business.
This will be achieved:-
(i) Using Posters
Several posters will be strategically placed within the intended business market location.
These posters will carry such information as the direction of the business, product and
services offered, the special offer prices and charges for goods and services on discount.
(ii) Through sign Boards
A sign board will be designed to show the location and direction of the business to potential
buyers. It will strategically, few meters from the business premises. (Kapsabet- Kakamega
junction will be the chosen site for this.)
(iii) By using Mass Media
Advertisement will be through TV and radio. This will be done in both Kiswahili and the
local dialect. Magazines and newspapers will also be used to show price lists and pictorials of
exact products as well as special offers and discounts available.
(iv) Through Mails and Hand bills
This venture will print handbills and give to the general public to provide them with the
information on the products and services. These will be mailed to several institutions within
the market. The handbill will contain the business address, phone number and location.
(v) Use of Music
The business will budget for DVD changer that will be used to promote the business. It will
be played occasionally at a tone to attract music lovers to the business and then inform them
of our products by the sales team.
Advertisement and promotion budget
TOTAL 23,500.00
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Evaluation of effectiveness of promotion and advertisement activities
The proprietor will assess the effectiveness of all techniques employed in all activities aimed
at influencing buying habits of prospective customers and improving sales through:-
(i) Assessment of cash-in-flow and daily sales
(ii) Assessment of profit margin
(iii) Increase in growth of the total market share
(iv) Expansion of the total market size
25
The staff will also be motivated and good working conditions provided. This will
promote there attitude towards there duties.
Better communication between the employees and employer will also be enhanced for better
sales. Staff recruited will be of enough relevant competence and work in shifts to avoid
overworking. Their salaries will be paid on performance basis. All appointed distributors and
sale representatives will receive discounts based on total sale made per person.
CHAPTER FOUR
4.0.0 INTRODUCTION
This chapter defines and elaborates ranks, responsibilities and qualification of personnel in
the business enterprise from junior to senior staff. It also has details on remuneration, staff
appraisal and development as well as communication within the organization.
4.0.1 BUSINESS MANAGER AND QUALIFICATION
The owner of the business will be the general manager. He will be the highest in hierarchy
and will have such duties and responsibilities as:-
Duties and responsibilities
(a) Marking business decisions.
(b) Planning and organization.
(c) Coordinating activities within the business.
(d) Supervision of business chores.
(e) Delegation of responsibilities.
(f) Fixing employees salaries.
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(g) Set rules and regulations to be followed.
Qualifications
Must be 25 years and above.
Organizational Chart
MANAGER/OWNER
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OPERATIONS
MANAGER
WORKSHOP TECHNICIAN
ACCOUNTS CLERK
WORKSHOPTECHINCIAN
SALES TEAM
SECRETARY/RECEPTIONIST
CLEANERS
(ii) Technicians
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Roles and duties
The Team will ensure all the customers are given the best they need and deserves at the
appropriate time. This will be achieved by marketing the product within and outside the
enterprise building. They will make sale as per the set targets.
Roles and Duties
(a) Marketing the business name products and services.
(b) Enhance the business image
(c) Report to the Assistant manager to give accounts of daily sales and reports.
(d) Serve customers both within and outside the premises.
(e) Perform any other duties as maybe delegated to them by the authority.
Qualification:-
(a) Must be at least 18 years old
(b) Holder of Diploma in Telecommunication Engineering, IT or Computer Science.
(c) Must have Certificate of good conduct
(d) Certificate in sale s and marketing will be an added advantage.
(v) Receptionist
Roles and Duties
(a) Will be in charge of customer care desk.
(b) Direct customers and visitors within the premises
(c) Will carry out typing and printing duties whenever need for such arise.
(d) Will also be in charge of cleanliness of the premises.
Qualification
29
i) Has to be a lady between 21 – 27 years old at the time of her employment.
ii) Computer literate
iii) Must be able to speak fluent English and Kiswahili
iv) Be polite and self-disciplined, and can work for longer hours.
(vi) Cleaner
She will ensure high standards of cleanliness in the premises. All his duties will be overseen
and supervised by the receptionist.
Qualification
At least K. C. P. E certificate
4.0.3 RECRUITMENT AND SELECTION
All prospective employees will be reached and stimulated to apply through news papers,
posters and radio broadcasting. To stimulate them, salaries will be stated for each relevant
post announced as vacant.
This process will include:-
a. Advertisement of the vacant post
b. Reception of application letters through mails and Emails.
c. Invitation of those candidates who meet the specified requirements
d. Interview
e. Selection
f. Employment
30
PERSONNEL QUALIFICATION AND RESPONSIBILITY TABLE
The qualification that the manager will be looking for in the candidates may be summarized as in the table below:-
31
REMUNIRATION TABLE
32
The main rating that will be applied will include:-
(a) Trait based
These will be mainly used to access the personal characteristics of the employees as it
relies on factors such to include:-
• Communication skills
• Loyalty
To ensure that each of the staff has the required skills and knowledge necessary and
relevant to carry out their duties competently.
33
Importance of Training and Development
Reduce supervision since the supervisor will spend less time in correcting errors.
Help the employees keep in touch with the changing and developing technologies.
4.0.7 COMMUNICATION
This is the process of passing information from within the organization to produce mutual
understanding.
WAN Communication intends to use the following types of communication for smooth
running and passing of information in the business.
Advantages
(a) Specific information is clearly spelt out.
(b) Quick decision can be made when speed is required.
(c) Updates the subordinates with information about ration of their job.
Advantages
a) Promotes understanding and co-ordination among various departments in the
business.
b) Enhance production due to co operation.
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d) Cohesion in leadership at the enterprise.
35
4.0.9 SUPPORT SERVICES
These will include any other service that will be provided to this organization to help
normal operation. WAN Communication will need such services that will include:-
i. Banking Services
Such services will help the business operate an account and pay out the
creditors or receive payments on behalf of the business.
37
employees may face because of performing the same job over and over. This system will
require that the employees be trained in several jobs.
CHAPTER FIVE
OPERATION AND PRODUCTION PLAN
5.0.0 INTRODUCTION
This chapter outlines all the activities that the venture will carry out. Such will include:-
(a) Sale Telecommunication Equipments.
(b) Installation and configuration of new equipments.
(c) Repair and Maintenance.
(d) Networking.
Good operation strategies will ensure that WAN Communication Ltd attains maximum
utilization of available resources. It will also take advantage and capitalize on competitors
weaknesses and carry out timely market survey, to understand market requirements in order
to adopt efficient techniques in operation.
38
MACHINES , TOOLS AND EQUIPMENTS
TOTAL 320,000.00
The organization will recruit distributors to deliver goods and services to the customers. In
this way, the Company will bring its goods and service closer to the prospective customers
and subdivide the whole operation area into units which will make the organization have
control of the market area.
It will also enhance customer satisfaction by adopting price reduction and timely service
rendering strategies
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5.0.2 OPERATION STRATEGY
WAN Communication will carry out market survey in order to understand the market on a
wider perspective. The result from such survey will be used to implement the firm’s
operation strategies. The organization will also give incentives to loyal customers in order
to maintain customers as well as offer discounts to customers who purchase in bulk.
Intensive marketing techniques will also be enforced to widen the market and to market the
venture further, all employees will have to wear uniforms with painted pocket shirt or
blouses which bear the company name and logo.
Trouble Shooting
Costing & Estimation
Costing
Supply of Material
Actual Repair
Actual Installation
Testing Repaired Equipment
Receive Payments
Paying for services
40
5.0.4 REGULATION AFFECTING OPERATION
These are laws and regulations that WAN Communication will adopt as whole while
operating. The legal laws binding the business will be inter-twined to the organizations
own rules for a profitable operation.
Such rules will be divided into two categories as:-
(A) External Rules
(i) Employment Act Cap 226
The organization will observe this Act by offering the stipulated salaries and wages as well
as the employees’ rights.
(ii) Public Health Cap 260
The organization will observe standard health requirement in the premises and with the
employees.
(iii) Trade License Act Cap 497
The organization will apply for the acquisition of this license from the Ministry of Trade
and Industry.
(iv) National Social Security Fund Act Cap 258
The organization will register with the NSSF and forward monthly contributions of all
employees to the fund.
(v) Income Act Cap 620
The organization will foresee the registration of its employees with the Kenya revenue
Authority to curb incidences of tax default and also have the organization remit its own
returns to the authority.
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CHAPTER SIX
FINANCIAL PLAN
6.0.0 INTRODUCTION
This chapter focuses on matters pertaining to finance, expenditure and inputs. It represents
financial estimations at the beginning and in future in quantitative terms. These details will
then be used by the management of WAN Communications to assess the performance of
the venture.
PRE-OPERATIONAL COST
ITEMS COST(KSHS)
Insurance 10,000.00
Stationary 4,5000.00
Miscellaneous 2,800.00
TOTAL 574,800.00
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6.0.2 ESTIMATION OF WORKING CAPITAL FOR THE YEAR 2011, 2012 & 2013
CURRENT LIABILITIES
TOTAL WORKING
CAPITAL 353,500.00 960,250.00 1,434,800.00
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6.0.3 LOAN AND INTEREST REPAYMENT
The proposed business loan will be from Equity Bank of Kenya. The loan will be Ksh
660,000.00 which will be repaid at an interest of 16%. The loan will be paid for a period 30
months with agrace period of 2 months from the date of borrowing.
The borrowed amount will all be introduced into the business and the repayment schedule
will be as per the table in the next page.
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PRINCIPAL MONTHLY INTEREST BALANCE
MONTH No.
AMOUNT INSTALMENT
45
Balance = Principal Amount - (Interest +Monthly Installment)
Bank Loan
Monthly Installment = 30 ( No of Months)
46
6.0.4 (A) Projected Cash Flow for the year (2011)
DETAILS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
CASH INFLOW
SALES &
SERVICE CHARGE 20,000 35,650 40,700 50,230 52,300 54,100 50,600 57,800 56,000 58,900 58,901 59,100 1,594,28
RECEIPT 5,000 2,000 8,000 4,000 - - 10,000 5,000 4,000 2,000 9,120 85,000 134,12
DEBTORS - 20,000 30,000 400,000 350,000 860,000 100,000 200,000 220,000 310,000 200,000 600,000 2,930,00
1,500,17 1,229,67 1,073,26 1,253,49 1238,68 1,890,51 1,795,66 1,707,93 1,665,34 1,710,38 1,655,46 2,072,04
TOTAL INFLOW 5 5 0 0 5 5 5 5 1 1 0 0 21,461,89
CASH OUTFLOW
PURCHASE 20,750 15,715 20,000 15,000 20,800 16,000 20,300 16,999 10,000 17,000 18,980 21,800 213,34
RENT& DEPOSIT 28,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 105,00
SALARIES 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 2,580,00
ELECTRICITY 400 500 450 600 550 700 650 800 750 800 750 900 7,85
BANK LOAN
REPAYMENT - - 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 255,20
ADVERTISEMENT 9,500 500 500 14,500 500 500 500 14,500 500 500 500 14,500 56,00
INSURANCE
COVER 30,000 - - - - - 30,000 - - - - - 60,00
TELEPHONE&
STATIONERY 1,000 800 750 755 900 910 800 700 910 756 890 900 10,07
WATER 500 800 800 900 820 820 1,300 920 750 786 900 940 5,98
TOTAL OUT FLOW 328,150 274,815 274,000 267,255 262,270 255,430 350,550 322,594 325,860 322,942 327,520 332,600 3,917,36
1,172025 994,560 799,260 986,235 976,415 1,635,08 1,445,13 1,385,34 1,339,48 1,387,43 1,327,94 1,739,44 17,544,53
NET CASH FLOW 5 5 1 1 9 0 0
47
6.0.4 (B) Projected Cash Flow for the year (2012)
DETAILS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
CASH INFLOW
1,739,44 2,150,64 2,605,26 3,050,93 3,437,11 4,124,64 4,880,95 5,667,89 6,926,98 7,620,44 8,460,17
BEGINNING CASH 0 0 1 7 5 8 4 9 1 7 9 9,455,805 60,120,30
SALES &
SERVICE CHARGE 62,000 62,750 61,778 63,432 65,273 70,999 84,679 85,228 88,779 92,333 93,222 94,666 2,005,139.0
RECEIPT 100,000 98,820 103,251 119,222 332,000 421,356 400,722 376,800 300,831 426,870 560,800 700,890 3,941,56
DEBTORS 625,000 650,001 652,320 569,000 600,000 621,432 639,876 641,257 651,234 668,765 675,678 519,283 7,513,84
2,526,44 2,962,21 3,422,61 3,802,59 4,434,38 5,238,43 6,006,23 6,771,18 7,967,82 8,808,41 9,789,87 10,770,64
TOTAL INFLOW 0 1 0 1 8 5 1 4 5 5 9 4 72,500,95
CASH OUTFLOW
PURCHASE 40,000 52,024 60,763 61,772 70,000 80,000 92,826 99,555 102,434 103,876 92,083 92,140 947,47
RENT 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 84,00
SALARIES 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 2,580,00
ELECTRICITY 800 900 937 1,200 2,246 2,031 1,956 1,949 2,260 2,032 686 4,999 8,99
BANK LOAN
REPAYMENT 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 25,520 306,24
ADVERTISEMENT 9,500 500 500 14,500 500 500 500 14,500 500 500 500 14,500 56,00
TELEPHONE&
STATIONERY 1,000 826 973 1,024 2,264 2,030 1,925 1,899 2,884 2,773 2,667 3,689 13,95
WATER 800 700 800 920 820 720 9400 920 750 786 900 940 6,00
TOTAL OUT FLOW 375,800 356,950 371,673 365,476 309,740 357,481 338,332 344,203 347,478 348,236 334,092 357,339 4,186,79
2,150,64 2,605,26 3,050,93 3,437,11 4,124,64 4,880,95 5,667,89 6,926,98 7,620,44 8,460,17 9,455,80 10,413,30
NET CASH FLOW 0 1 7 5 8 4 9 1 7 9 5 5 68,314,17
48
6.0.4 (B) Projected Cash Flow for the year (2013)
DETAILS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
CASH INFLOW
BEGINNING CASH 10,413,305 11,132,133 11,834,015 12,596,534 13,640,291 14,122,129 14,688,063 15,328,017 16,018,432 16,739,917 17,426,421 17,991,691 157,808,
SALES &SERVICE
CHARGE 95,856 92,140 98,220 93,162 99,340 102,223 101,444 103,825 108,333 110,236 126,887 163,555 2,895,
RECEIPT 570,901 522,688 600,400 923,445 400,361 447,881 493,863 500,000 520,633 420,923 367,924 499,861 6,268,
DEBTORS 519,229 522,636 463,801 455,667 439,891 486,222 499,660 516,826 509,823 566,871 522,081 500,000 5,532,
TOTAL INFLOW 11,599,291 12,269,597 12,996,436 14,068,808 14,579,883 15,158,455 15,783,030 16,448,668 17,157,221 17,837,947 18,443,313 19,155,107 170,905,
CASH OUTFLOW
PURCHASE 92,145 93,162 93,179 94,222 96,822 98,333 99,429 99,360 99,560 99,627 99,382 102,801 1,167,
RENT 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 84,
SALARIES 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 774,000
ELECTRICITY 800 860 937 950 1,000 920 1,000 982 990 730 686 1,020 10
BANK LOAN
ADVERTISEMENT 9,500 500 500 14,500 500 500 500 14,500 500 500 500 14,500 56,
TELEPHONE
&STATIONERY 3,000 3,600 2,887 2,817 1,826 1,936 1,946 1,984 1,999 2,009 2,120 2,012 28,
WATER 1220 900 800 920 820 720 1200 920 750 786 900 1240 9,
TOTAL OUT FLOW 467,158 435,582 399,902 428,517 457,754 470,392 455,193 430,233 417,304 411,526 451,622 513,377 15,338,
NET CASH FLOW 11,321,133 11,834,015 12,596,534 13,640,291 14,122,129 14,688,063 15,328,017 16,018,432 16,739,917 17,426,421 17,991,691 18,641,730 165,567,
49
6.0.5 PROJECTED TRADING PROFIT AND LOSS ACCOUNT
WAN COMMUNICATIONS LTD
Projected Trading profit and loss Account
For the year ending 2011
-Expenses
Salaries 258,000.00
Rent 105,000.00
Electricity 7,850.00
Water 5,986.00
Telephone &Stationeries 10,071.00
Advertisement 56,000.00
Loan repayment 396,000.00
Company Registration 3,000.00
50
WAN COMMUNICATIONS LTD
Projected Trading profit and loss Account
For the year ending 2012
-Expenses
Salaries 258,000.00
Rent 84,000.00
Electricity 8,996.00
Water 6,000.00
Telephone &Stationeries
13,954.00
Advertisement 56,000.00
Loan repayment 264,000.00
TOTAL EXPENCES 690,950.00
51
WAN COMMUNICATIONS LTD
Projected Trading profit and loss Account
For the year ending 2013
-Expenses
Salaries 774,000
Rent 84,000
Electricity 10,875
Water 9,000
Telephone & Stationeries 28,136
Advertisement 56,000
TOTAL EXPENCES 962,011
52
6.0.6 PROFORMA BALANCE SHEET
WAN COMMUNICATION LTD
Proforma Balance Sheet for 3 years
Fixed Assets
Large Tools & Equipments 130,000.00 50,000.00 72,000.00
Small Tool & Equipments 70,000.00 25,000.00 60,000.00
Furniture & Fitting 120,000.00 7,000.00 11,5000.00
+Current Assets
Cash at hand 102,000.00 99,500.00 96,000.00
Cash at bank 306,000.00 520,000.00 732,500.00
Stock 213,344.00 189,000.00 200,000.00
Debtors 30,000.00 20,000.00 23,000.00
-Current Liabilities
Creditors - 15,000.00 19,000.00
Bank Loan 396,000.00 264,000.00 -
Owners Equity 340,000.00 - 250,000.00
Interest 21,120.00 42,240.00 42,240.00
53
6.0.7 BREAK EVEN ANALYSIS
This is an effective way of presenting the relationship between volume cost and profit. It also
gives the relationship between the revenue and cost with respect to volume. It shows
equilibrium level of sale at which revenue equals cost. This equilibrium point is also known
as the break Even Point. At this point there is neither profit nor loss.
SALES 1,594,281.00 - -
EXPENSES - - -
Rent - 105,000.00 -
Insurance - 60,000.00 -
Salaries - 258,000.00
Electricity - - 7,850.00
Telephone - - 4,071.00
Water - - 5,986.00
Advertisement - - 56,000.00
Stationary - - 6,000.00
License - 6,500.00 -
54
Fixed Cost
(1) BEP = Contributi on Margin X 100
= 11.38%
= 1,594,281.00 – 337,907.00
= 1,256,374.00
1,256,374. 00
= 1,594,281. 00
X100
=78.80%
55
6.0.8 PROFITIBILITY RATIOS
This is used to reflect the element to determine the proportionality status of the business rated
against the established standards.
539,030.00
= 340,000.00
=1.585
539,030.00
= 1,594,281. 00
=0.338
Gross Profit
(iii) Gross Profit =
Sales
56
1,380,937. 00
= 1,594,281. 00
=0.866
Sales
(iv) Asset Turn Over = Average Total Sales
1,594,281. 00
= 2,093,769. 00
=0.761
Sales
(vi) Asset Turn over Ratio = Average Total Sales X100
1,594,281. 00
= 2,093,769. 00 X 100
=76.14%
Current Assets
(vi) Current Ration =
Current Liabilitie s
57
651,3444.0 0
= 757,120.00
=0.860
651,344.00
= 971,344.00
=6.71%
Totak Revenue
(viii) Inventory Turn Over =
Total Assets
539,030.00
= 971,344.00
=0.555
58
Pre-operation Cost 574,000.00
CONCLUSION
Market research leaves no doubt that WAN COMMUNICATION will be viable. The
outline and research has revealed that the existing Telecommunication industry
59
improvement in technology day by day, making it very vital for establishing of firms
which will be sensitive to these change technoloogy as well as taste and perference.
The business strategic location as well as entrepreneurial skills and managerial skills
acquired by the proprietor will make the business successful. Any short comings
which will be encountered during operation will be dealt with in the year to come
besides the preventive measures taken upon them.
The business will have all merit to give it shinning future!
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LOCATION MAP
ELDORATE
BUS STOP
POLICE P
OST
KAPSABET TOWN
HO
NAMGOI
SP
IT
ROUNDABOUT
AL
COMMUNICATION
WAN
PETRO
L
STATIO
N
HILLS
NANDI
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COUNTER
WORKSHOP
SHOP
MD OFFICE
SHOW ROOM STORE
Toilet
s
62