BUSINESS PLAN

OL’LESSOS TECHNICAL TRAINING INSTITUTE

P.O BOX 210,

LESSOS.

PRESENTED BY :

INDEX NO :

COURSE CODE :

PAPER NO :

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILLMENT FOR THE AWARD

OF DIPLOMA IN LAND SURVEY.

SUPERVISOR’S NAME :

EXAMINATION SERIES : OCT – NOV 2016

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DECLARATION

This project is my own original work and has never been produced and presented by anyone.

NAME :

SIGNATURE : ……………………………………………….

DATE : …………………………………………………………

This project is approved by my supervisor and presented to the Kenya national examination council.

SUPERVISOR’S NAME :

SIGNATURE : ……………………………………………….

DATE : ………………………………………………………..

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DEDICATION .

My great dedication goes to my almighty God for giving me good health while writing this business plan.

Also my dedication goes to my dear parents Mr. and Mrs. Charles Rosana and family members for their
moral sacrifice in educating me.

My dedications also go to my supervisor for the tireless work and sacrifice her work to go through my
business plan.

Last but not least I dedicate this work to my beloved friends Al-Hajj, venesther , lilian rispah , lemaiyan
and lemein.for their encouragement they are great inspiration to my life,

may the almighty Father Bless them all abundantly.

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ACKNOWLEDGEMENT

First and foremost I thank my heavenly father for his protection over my life without him and I could not
have protection over my life without him I could not accomplished my course. I also appreciate my aunts
and uncles for their financial support towards my college education. A lot of thanks goes to my
supervisor……………

She has enable d me to acquire such a plan. His guidelines and encouragement has helped me a lot.

Finally I am grateful to my fellow colleagues of Ol’lessos Technical Training Institute and lecturers
who have supported me morally, spiritually and academically and physically.

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 TABLE OF CONTENTS
DECLARATION ………………………………………………………………………………...i
DEDICATION …………………………………………………………………………………..ii
ACKNOWLEDGEMENT ………………………………………………………………………iii
EXECUTIVE SUMMARY ………………………………………………………………..…….iv
CHAPTER ONE..........................................................................................................................................1
1.0 BUSINESS DESCRIPTION PLANS................................................................................................1
1.1 MISSION STATEMENT..................................................................................................................1
1.2 BUSINESS NAME AND LOGO......................................................................................................1
1.3 BUSINESS LOCATION PREMISES AND CONTACTS................................................................1
1.4 BUSINESS/ADDRESS.....................................................................................................................3
1.5 FORM OF OWNERSHIP..................................................................................................................3
1.6 TYPE OF THE BUSINESS...............................................................................................................4
1.7 INDUSTRIES....................................................................................................................................4
1.9 PRODUCTION SERVICES..............................................................................................................5
1.10 NATURE OF OPPORTUNITY.......................................................................................................5
1.11 VIABILITY (JUSTIFICATION) OF THE VENTURE...................................................................5
1.12.2 GROWTH STRATEGY...............................................................................................................6
CHAPTER TWO.........................................................................................................................................7
2.0 MARKETING PLAN........................................................................................................................7
2.1 OBJECTIVES....................................................................................................................................7
2.2 CUSTOMER S ANALYSIS..............................................................................................................7
2.3 MARKET SHARE ANALYSIS........................................................................................................8
2.4 COMPETITION................................................................................................................................9
2.5 LOCATION/PREMISES MARKETING........................................................................................10
2.6 PRODUCTS SERVICE STRATEGY.............................................................................................10
2.7 PRICING STRATEGY....................................................................................................................11
2.8 PROMOTION/ ADVERTISEMENT STRATEGY.........................................................................11
2.9 PLACE (DISTRIBUTION) STRATEGY........................................................................................12
2.10 PEOPLE (SALES) TACTICS.......................................................................................................12
2.11 MARKETING SWOT ANALYSIS...............................................................................................13
CHAPTER THREE...................................................................................................................................16
3.0 ORGANISATIONAL (PEOPLE) PLAN.........................................................................................16

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 3.3 PERSONNEL STAFFING..............................................................................................................17
3.4 RECRUITMENT AND SELECTION.............................................................................................20
3.5 RETAINING AND MOTIVATION................................................................................................20
3.6 REWARDS......................................................................................................................................21
3.7 APPRAISAL...................................................................................................................................21
3.8 TRAINING AND DEVELOPMENT..............................................................................................21
3.9 COMMUNICATION......................................................................................................................21
3.10 LEGAL REQUIREMENT.............................................................................................................21
3.11 SUPPOROY SERVICES...............................................................................................................22
3.12 MANAGING CHARGES..............................................................................................................23
3.13 ACTION PLAN.............................................................................................................................23
CHAPTER FOUR.....................................................................................................................................24
4.0 OPERATIONAL PRODUCTION PLAN........................................................................................24
4.1 OBJECTIVE....................................................................................................................................24
4.2 FACILITIES AND CAPACITIES...................................................................................................24
4.3 OPERATIONAL/ PRODUCTION..................................................................................................25
4.4 OPERATION /PRODUCTION STRATEGY..................................................................................26
4.5 REQUIREMENTS..........................................................................................................................27
4.6 PERFORMANCE ANALYSIS.......................................................................................................28
CHAPTER FIVE.......................................................................................................................................29
5.0 FINANCIAL PLAN........................................................................................................................29
5.1 OBJECTIVES..................................................................................................................................29
5.2 CAPITALIAZATION INVESTIMENT..........................................................................................29
5.3 DESIRE FINANCING....................................................................................................................29
5.4 PRE OPERATION COST...............................................................................................................30
5.5 OPERATION EXPENSES..............................................................................................................31
5.6 PERSONAL EXPENSES................................................................................................................31
5.7CASH FLOW STATEMENT...........................................................................................................32
5.7.1 CASH FLOW PROJECTION FOR YEAR2012..........................................................................33
5.7.2 CASH FLOW PROJECTION FOR YEAR2013..........................................................................34
5.13 ACTION PLAN.............................................................................................................................42
CHAPTER SIX.........................................................................................................................................43
6.0 ECONOMY.....................................................................................................................................43
6.1 INDUSTRY.....................................................................................................................................43

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6.2 LOCATION VALUE......................................................................................................................43
6.3 MARKETING.................................................................................................................................43
6.4 OPERATION..................................................................................................................................44
6.5 FINANCIAL....................................................................................................................................44
6.6 SECURITY......................................................................................................................................44
6.8 RISK ANALYSIS...........................................................................................................................45
APPENDIX I:........................................................................................................................................46
APPENDIX II........................................................................................................................................47

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 EXCECUTIVE SUMMARY
BUSINESS DESCRIPTION

This section gives a brief eye overview of business it’s name, form of ownership location address type
of production and services offered justification of opportunity and industry in general and growth and
entry strategies.

MARKETING PLAN

This section also gives an eye birds view of marketing and market share. Commended by the business
customers severed nature of competition including competition strength weaknesses opportunities an
threats the policy. Policy adopted sales tactics and description strategies.

OPERATION AND PRODUCTION PLAN.

The portion and production plan shows the facilities and capacity the price production strategies supplies
and policies production protection and regulation and registration offering production operation.

FINANCIAL PLAN

The financial plan deals with overview of the business fraction that affects the firm financial position. .
they will include cost preparation cost estimated working capital, cash flow statement. Profoma income
statement , profitability ratios, desired financial proposed capitalization and any other financial
information that will likely to affect the operation of the vectors.

RISK ANALYSIS

The business will carry risk analysis so as to expand risk analysis may involve installation of fire
extinguishers t be used in case of the fire outbreak and lastly insure the business against and loss for
example theft and flood.

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 CHAPTER ONE
1.0 BUSINESS DESCRIPTION PLANS
The name of the business name will be MWANYAGETINGE CARPENTRY WORKSHOP it
will be located at Kisii town Kisii county nyanza province. The ownership is a sole proprietor
and state up type. The business will majorly deal with production of the desks sit tables frames
card board chapatti rollers. The major goal of this enterprise is to make profit raise living
standard by offering employment for self and others. The business will under the following
address

MWANYAGETINGE CARPENTRY WORKSHOP

P.O BOX 1004 KISII

TELL 0703976968

Email: redemetohnyabate@gmail.com

1.1 MISSION STATEMENT

The business deal with the production of furniture and this intended to provide quality furniture
to the clients.

1.2 BUSINESS NAME AND LOGO

The name of the proposed business will be mwanyagetinge carpentry workshop. The major
activity is to deal with the production of furniture.

1.3 BUSINESS LOCATION PREMISES AND CONTACTS

1.3.1 Business location

The propose business will be located in Kisii town opposite street municipal council market. The
location of the business is suitable because of the following factors.

i. There is sufficient selling, this is because it is near the Nandi police headquarter whereby
security is sufficient and easily to be confirm
ii. Near its potential customers. This is due to the nearness to many schools e.g high school,
churches, and hospital.
iii. Availability of electricity and telephone services. This is due to the government potential
in which it has made the municipal council to have this for the emergencies cases.
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LOCATION MAP

mwanya
getinge

CARPENT
KISII TOWN
RY

OGEMBO STREET
KISII – KISUMU HIGHWAY

POLICE
STATION

MARKET

1.4 BUSINESS/ADDRESS
The address of the business will be
MWANYAGETINGE CARPENTRY WORKSHOP
P.O BOX 1004
KISII
TEL: 0703976968
KISII
Email: redemetohnyabate@gmail.com

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1.5 FORM OF OWNERSHIP
Mwanyagetinge Carpentry Workshop will be a Sole Proprietorship kind of Business by
Benjamin M. Juma whereby the two names compose name of the business. Sole trader will enjoy
the following.

i. He will enjoy all the freedom since he will be her own boss
ii. Easy decision making because she does not consult anybody when making decision.
iii. He will be independent
iv. He will have close and clear direct with her customers
v. He will be the boss of the business

However this business has the following disadvantages

i. It suffer a loss alone

ii. In case of death or sickness the business collapse
iii. Insufficient capital
iv. Lack of proper management

Solution to the above disadvantages

1) Involve the family members in the business

2) Employ an assistance manager who is qualified in the field of the proposed business
3) Acquire loans from co-operative banks

1.6 TYPE OF THE BUSINESS

The type of the business will be under the production industry. The business will be of a startup
type of it expected to commerce on January 2012 since the owner have gathered enough capital
to start the business.

1.7 INDUSTRIES
The business will be production industry because it provides serviced to its customers.

The industry is inspiring to be the most top generator of income into the country because of high
demand of the production. The products the industry also would like to be a role model to the
other industries this is by discovery all sort of corruption and doing the work of production into
perfection.

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1.8 BUSINESS GOALS

The goals of the business will be as follows :-

 Maximization of profits so as to earn more investment

 Creation of employment to the owner and other people
 Enable the owner to make use of the total response hence saving the country foreign
exchange
 They will also enable the owner to lead a decent life because she will be able to get
her basic needs because of the self employment
 Enable the owner of the business become the role model
 The business will enable the employees to put into practice skills acquired in their
training.

1.9 PRODUCTION SERVICES

The business will be producing different kind of furniture which will include sofa sets
cupboards, card boards bee hives frame beds coffins desks

1.10 NATURE OF OPPORTUNITY

The business idea is suitable and benefit to the society as it will offer products which are of high
quality to clients because there is good transport and communication network since it is located
at Kisii town. The business will also offer production at affordable price that will meet the users
need

1.11 VIABILITY (JUSTIFICATION) OF THE VENTURE

The following factors justify the service of the business

i. There is enough security in the town

ii. Ensure there is security in the factory
iii. Availability of infrastructure i.e. roads and rail are available to the customers

1.12 Entry and growth strategy

1.12.1 Entry strategy

In order to penetrate the market the following strategies are to be considered

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 1) Knowing the competitors by knowing the weakness and strength of the competitors the
firm can improve in production in order to attract more customers.

2 Promotion and advertisement so as to create awareness to the customers. Promotion involves

giving the gift such as calendars and after sale service while advertisement involves use of radio
television posters and magazines

3 Employees --employee must be qualified in their various fields of operation so as to attract

more customers

4 Discount –customers who buy products in large quantity will be given a discount of certain
percentage.

1.12.2 GROWTH STRATEGY

For expansion of the firm the following techniques are considered

a) Market diversity. The owners will seeks customers from different district and by so
doing there will be more and more customers
b) Records keeping. The accountant should be competent in the areas so as to ensure
perfect and good records keeping and also balancing
c) Re- investment of profit due to high profit and high demand from the customers the
business will be expected using the profit made to buy sewing machines and expand the
room.

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 CHAPTER TWO
2.0 MARKETING PLAN
For the proper survival and the growth of the business it must have a stable market. To achieve
the suitable market the business must win the customers confidently towards it. This will be
being done through selling quality products and services, offering incentives, advertisement and
promotion.

2.1 OBJECTIVES
The objectives of the business are:

a. To create job opportunities in the community through having market staff

b. To provide quality products and service to its clients
c. To make maximum sale and maximum profit
d. To adopt new technology in market
e. To diversity it service to serious parts of the town through marketing
f. To open another branch in the populated side of the town with few competitors
around in five years times.

2.2 CUSTOMER S ANALYSIS

MWANYAGETINGE carpentry workshop indent to capture its customers within Kisii town and
its environment the specific targeted customer are as follows.

Industry

The area surrounding the business is densely populated and also the high population is in Kisii
town. These are expected to form a big number of customers.

Hospitality

Kisii town being the headquarter has a big district hospital within that is Kisii district hospital
whereby I can make coffins beds, shelves table and there are also private hospitals that I can
make a bigger market with them

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2.3 MARKET SHARE ANALYSIS
Findings from research alone shows that the demand of furniture in the area i.e. nyanza carpentry
workshop minto hills carpentry workshop and pema wood joinery have established themselves
but the proprietor expects to capture 38% of unexploited market.

Many customers do not have access to the existing workshop because of poor public relation
between customers and the business are also the customers cannot meet high price being charged
therefore the business indent to capture prospective customers. It will achieve these by charging
reasonable price and having good public relation with the customers.

MWANYAGETINGE carpentry workshop 75X360 = 75%

360

Nyanza carpentry workshop 150X360 = 15%

360

Minto hill carpentry workshop 50X360 =10%

360

Degrees
10%

15% pema
minto
nyanza

75%

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2.4 COMPETITION
The business is found to face strong competition from the three carpentries and other workshop
as they amend some of their weakness they have poor public relation. A major problem is that
the business has existed in the area for long period of timed hence competitors are well known
by the people living in the area. To cope with these competitors the proprietor has analyzed her
strength and weakness. Hence she is intending got improve their strength and rectify weakness of
competitors

The table below shows the summarized strength and weakness of competitors

Competitors strength Weakness

Mwanyagetinge carpentry  Well trained staff
workshop  Have good public
relation
 Reasonable price
 Good location
 Have all kind of
furniture
Nyanza carpentry workshop  Well train staff
 Good location
 Good manager
 Good public relation
Minto hill carpentry workshop  Well trained staff
 Good location
 Good manager
 Have well established
competitors in the area
 Raw ‘material is the
problem
 Charge are high
 Opens late and closes
early
 Irregular openings
 Do not open during
weekend
 Very expensive
 Poor public relation

Mwanyagetinge carpentry workshop will capitalize weakness analyzed above in order to survive
the market and cover them into strongholds. This will enhanced through:

a) Good relation with client and the public at large

b) Stocking all kinds of furniture needed by the customers
c) Employing high skilled personnel

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 d) Emphasizing quality products at competitive area.

2.5 LOCATION/PREMISES MARKETING

Business location

The business will be at Kisii opposite police station. The factors considered when choosing the
location as follows

Availability of market. The business has been located next to various institution and colleges
where there is high demand for the products.

Infrastructure. Since the location is at town hence there is good transport and communication
and the clients get access to products easily.

Competition. There is a low competition as there are other three firms which provides the same
products (goods)

2.6 PRODUCTS SERVICE STRATEGY

The business will be dealing with production of different kinds of furniture which include desks
sits like sofa set coffins shelve frames chapatti rollers beds card board and many together
requested by the client. This will be produce in large a qualities with different style according to
users needs. The business is meant to serve the various institution factories companies within the
town. According to the purchasing power will be high since most of regular them are working
close and earn money

2.7 PRICING STRATEGY

Pricing strategy is a process that will involve many factors involved include:

Production cost

 Every cost incurred during the production will be accounted for there production cost
include labour involved time spent on selling products
 Materials

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Competition

The cost of the products of the competition will be checked. This will help the business to set up
price fairy comparing with competition.

Government regulation and policy

Value added tax (VAT) and other government relevant raise would be charged against the
products when setting the price. This will help the business bide by the government policy.

Profit margin

A15% margin will be added to every product sold. This will ensure that the business will not
operate at a loss.

2.8 PROMOTION/ ADVERTISEMENT STRATEGY

2.8.1 Promotion

In order to facilitate increase in sales MWANYAGETINGE carpentry workshop will elaborate

promotion campaign,

Trade first and exhibition. The business will be able to display its products to it potential
customers through trade first and exhibition

Competitive price- Customers will enjoy reduced price and services offered as free packing and
wrapping of products.

2.8.2 Advertisement

To create awareness of the business and its products MWANYAGETINGE carpentry workshop
will advertise through

i) Business cards
MWANYAGETINGE carpentry workshop will be having business cards their names
the business logo and their contacts, address these card will be distributed to enable
relationship in business and lost of cards will be at 50 per card.

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 ii) Mass media
This will be done through radio and television using a channel that will reach all the
potential customers. This chastised will be CITIZEN and Q fm. Also posters swill be
in street where many people can see the posters will cost 20 per poster.

2.9 PLACE (DISTRIBUTION) STRATEGY

The business will adopt the direct channel of distribution so that the proprietor will have direct
with the customers. This will help her to learn the reaction of the clients towards her business.
During the first year of the business it will be having a pig up to distribute the furniture to the
customers who buy in bulky good. As the business grows with fine. The proprietor intends to
buy her own business pickup for distributing furniture. Also she intends to install business
telephone to be communicating with her client that is after month.

2.10 PEOPLE (SALES) TACTICS

To ensure sales volume the following strategies will be used.

a) Quality products

MWANYAGETINGE carpentry workshop objectives is to produce quality products and

establish a strong market base for its products and by doing so it will meet the customer
needs hence increasing the sales.

b) Discounts
Customers who buy products in large quantities will be given a discount. This will also
increase the sale
c) Opening and closing time
MWANYAGETINGE carpentry workshop will be opening at 7:00 am to 6:00 pm on
weekdays and during the weekends it will be opening at 8:00am and closes at 6:00pm.
This will enable the business to serve all the customers whenever they are in need of the
products.
d) Credit facilities will be offered to existing customers and no credit will given before
clearing the previous debts.

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2.11 MARKETING SWOT ANALYSIS
S –strength

W-weakness

O- Opportunities

T threats

The analysis is all about the strength and weakness. The business is likely to encounter and its
COMPETITORS

A successful enterprise should always face the obstacle in his oe her days business. The above
competition have get the strength and weakness as follows

COMPETITOR

A. MWANYAGETINGE CARPENTRY WORKSHOP

STRENGTH

 Well train staff personnel

 Have all kind of furniture
 Good location
 Good public relation
 Reasonable price
 Good management

WEAKNESS

 Have well established competitors in the area

 Raw materials

B. NYANZA CARPENTRY WORKSHOP

STRENGTH

 Well train staff

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  Good location
 Have good relation
 Good management

WEAKNESS

 Charges highly
 Opens late and closes early

C. MINTO HILLS CARPENTRY

STRENGTH

 Well trained staff

 Good location
 Good management

WEAKNESS

 Irregular opening hours

 Do not open during weakens
 Very expensive
 Poor public relation

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 CHAPTER THREE
3.0 ORGANISATIONAL (PEOPLE) PLAN

OBJECTIVES

a) To provides quality working environment to the workers

b) To ensure the workers are remunerated accordingly
c) To create job opportunities in the center hence building the nation
d) To create job opportunities in the centre community both self and nearness clients

Management team

The business is expected to run smoothly under proper organization and management. This will
be acquired by proper distribution of responsibilities among the personnel working in the
business.
Manager

Deputy Manager

Senior Accountant Sales manager Driver Watchman

carpenter

Carpenters Cashier Sales person

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3.3 PERSONNEL STAFFING

3.3.1 Business manager

The business will be having the owner as the manager assisted by the:

 The deputy manager

 Senior tailor
 Accountant

1. Manager

JUMA MAGUNDA BENJAMIN

Age 25

Marital status- single

Duties and responsibilities

i) Overall manager of the business in all departments

ii) He will be facilitating major decision making
iii) He will be recruiting employees
iv) He will be directing supervision and coordinating business strategies

Deputy Manager

i) He/ she should be married

ii) He/ she should be 27-32 years old
iii) Qualification
iv) Should be diploma holder in business administration
v) Have experience of 3 years and above in the same field

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Duties and responsibilities

 He/ she are the administrator in the absence of the manager.

 Coordinate the work

Senior carpenter

 Should be a holder diploma in carpentry workshop

 Should have an experience of at least 2 years

Duties and responsibilities

 Supervising all the carpentry department and tasks

 Should be reporting to the deputy manager
 Responsible for a planning controlling and directing all the carpentry work
 Accountant
 Should be a CPA iii holder
 Should be conversant with accounting packages such as database, spreadsheet quick book
e.t.c.

Duties and responsibilities

 Handling all customers financial records

 Keep the firm financial statements
 Preparation of the financial statement
 Preparation and payment of salaries to employees

Sales manager

i) Diploma in sales and marketing

ii) Computer literate
iii) Certificate in book keeping and KATC section two

Duties and responsibilities

i) Should ensure that the right advertisement is done

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 ii) Making sales on behalf of the firm
iii) Promoting the produce in the market
iv) Ensuring good relationship between the customers and the company
3.3.2 Personnel number qualities and duties
Personnel Qualification
Secretary Secretarial course
Computer literate
Experience of over 3 years
Age between 20-28
Carpenters Certificate in carpentry
Experience of at least 2 years
Age 25-30 years
Salespersons Certificate in sales marketing
Experience of at least 2 years
Casher At least CPA certificate
Experience of at least 2 years
Computer literate
Drivers Authorized driving license
Experience of more than 3 years
Watchmen Physical fit
Age between 30-40 years
Experience of than 3 years
3.4 RECRUITMENT AND SELECTION
3.4.1 Recruitment
18
No Duties
1 Writing minutes in the official
meeting
Receiving messages for the
manager
Informing staff the meeting to
held
8 Making furniture
2 Promote the products
Accounting the driver when
transporting products
1 Receiving payment from the
customers
Issuing receipts after payment
2 Transporting products from the
firm to the customers
Bringing input into the company
2 In-charge of the security in the
firm and office
Checking of the visitors carrying
in and out of the firm
The process of employment potential employees will be carried out through these methods,
posters public announcement the public are made aware to recruitment through newspaper and
magazines. The announcement will include the position to be had and the time and duration for
sending the application

3.4.2 Selection

After recruitment of the workers selection will be done basing on the qualification of the
individual. Also in the case of an individual has experience in a given field of order to improve
production

3.5 RETAINING AND MOTIVATION

The staff will enjoy the place because their needs and requirements will be given first. The
proprietor will do the following to improve the morale of the business

a) Encouraging personnel morale by salary increase

b) Giving annual leave
c) Giving the a ward when some perfect job is done

3.6 REWARDS
These are offered to the;

 Employees who improve their work effecting and efficiently

 Employees who will be working to their perfection in the department

3.7 APPRAISAL
In any enterprises the work done by workers should be measured by the performance within the
business subordinate staff are given incentives to motivate them. Appraisal also involves
weeding of non active subordinate staff within the business.

3.8 TRAINING AND DEVELOPMENT

Due to advertisement and increase of the new technology in the day to day life business training
is done to powered to be continuous following the hierarchy of author in the organization
training for senior manager will be done formally and will be done externally at least once per
year and the junior workers can be set for training when the needs arises also the employees
would be given chance to attend seminars in order to improve the production

19
3.9 COMMUNICATION
The business will be able to put up a telephone procedural manual to allow for the fast
communication between the clients. The business will put a landline and mobile number so as to
reach its client within the shortest time possible to deliver services effectively the use of hired
pick up is required and in due time the business will be plan to its personnel/ private car.

3.10 LEGAL REQUIREMENT

3.10.1 Licenses
For any business to operate there should be a trading licenses and this is obtained from legal
authority to 5.50 per year
3.10.2 Permits
The business require the following permits before it starts to operate
permits source Cost per year
Sign board Local authority 1000
Registration of business District headquarter Kisii 3500
service charge municipal council

3.10.3 BY- LAWS

The rules and regulation governing the business and as follows
i) P.Y.E. (pay as you earn)
ii) NHIF National hospital insurance fund
iii) NSSF National social security funds
iv) Payment of vat (value added tax)

3.11 SUPPORT SERVICES

Below are some of the bodies that will be used to beneficial services to the business.
BANKS
For business to expand it will be required to have operational services finances to the cater for
implementation of new ideas the finance will be from banks like.
NATIONAL BANK
KISII BRANCH

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P.O BOX 577
KISII.

EQUITY BANK
KISII BRANCH
PO BOX 577
KISII

3.12 MANAGING CHARGES

For any business to service many charges are expected so as to a low for the improvement of the
firm when the firm management team are unwilling to cooperate hence this is advancement of
technology due to the multi-dimensional growth in the field of technology whereby it may under
the charges in management in that when there is low income this lead to low purchasing power
this goods products or lack of employment contributes to charge in management since client
have low income to earn a living thus lower the living standard of the surrounding

3.13 ACTION PLAN

The main objective is to make sales and maximize profit and the management team will be
responsible for the smooth running of the organization. The organization team and selected
basing on the qualification and thus allocated to the duties and responsibilities basing on the
qualification and also the number considered recruitment and selection of staff will involve use
posters and public announcement and also above measured by performance of the workers of
entire enterprise and also involve weeding of non active subordinate staff training is also done to
the recruited staff and also given chance to attend seminars in order to improve the production
and also put up a telephone to allow for communication also legal requirement like licenses and
this is obtained from legal authority in Kisii town to ksh 45000 per year.

CHAPTER FOUR
4.0 OPERATIONAL PRODUCTION PLAN
This will show the plan off activities to be carried out in the business, the facilities required and
their capacities. It will act as a guide in order to maximize the utilization of the avail able
resources

21
4.1 OBJECTIVE
The objective of the business are;
i) To provide quality services to its clients
ii) Make sales and maximize profit
iii) To adopt to any new technology in case of any change
iv) Within five years it will have bought equipment which will make work easier for
example purchasing a pickup to help in foster distribution of the services and goods and
modern computer system
v) To help show the quality of the business facilities and this cost to allow to effective
running of the business and help show the company where facilities are purchase.

4.2 FACILITIES AND CAPACITIES

FACILITIES QUANTITY COST(KSH)
Power saw 3 18400
Sad paper 10 dosen 2000
Tape measure 10 of them 1500
Hammer 6 ““ 9500
Chalks 10dosen 3000
Receipt book 2 “ 1000
Pens 1“ 1500
Nails 20 kgs of different inch 60,000
Randers 6 of them 3000
Timbers 100 tones 100,000
Cushions 100 bundles 3000
Vehicle 1 180000
Machine maintenance 1 2000
Totals 422400

The above facilities will be required for the smooth running of the business
This will be purchase from Ominas hardware limited.

4.3 OPERATIONAL/ PRODUCTION

To produce the furniture there should be variety stages involve in. these are
i) Designing process
This is drawing up the desired for the for the final products
Experience carpenter will carry out the designing in a designing book
ii) Taking of smooth and measurement

22
 Here timber are smoothen so that to give a very since quality of products.
Also the measuring if timber before joining takes place also in the area
iii) Cutting
The carpenter will cut the timber according to the measurement by making sure that it
comes out with the right or occurrence measurement of the timber
iv) Rollin
Here the milling of timber will place by the rolling machine this is to come with
different system of manufacturing.
v) Nailing
He is a place whereby the join edges are nail to become with the permanent and
strong furniture.
vi) Shining
Here is whereby the product is shined by the use of sad paper to come out with a
smooth surface of the furniture
vii) Glueing
Here the joined edges are glued so that to become firm and strong and to a very nice
looking of the furniture.
viii) Application of colour
He the furniture a applied with colour that are fit for timber
ix) Drying
Here the final product is left for some time to allowed drying this become colour are
not support to be touched to be while they are wet
x) Storing
The finished products are taken to the store ready to be taken by the purchaser by the
customer. Every products has its own slip showing the name of the business i.e
MWANYAGETINGE carpentry workshop and the type of the product style

4.4 OPERATION /PRODUCTION STRATEGY

For the business to run smoothly the owner has decided to use the best quality product materials
like the use of the indigenous trees to make the furniture. The target of the owner is to satisfy the
need of the customer by providing good quality products with their relatively good products.

23
i. Monthly raw materials required
materials Cost per month
Timber 55,000
Nails 30,000
Sand paper 15,000
Totals 100,000

Position Number Salaries

Manager 1 27,000
Department manger 1 10,000
Accountant 1 12,000
Senior carpenter 1 18,000
Sales manger 1 10,000
Driver 2 15,000
Secretary 1 11,700
Watchmen 2 12,600
Sales person 3 25,500
Carpenter 8 64,000
Casher 1 11,000
total 210,900

3 monthly overheads requirements

Transport 20,000
Insurance 16,00
Telephone postage and water 11,500
Electricity 10,000
total 68,500

4 total production cost

24
 Materials 11,0000
Labour 200,000
overheads 68,500
Totals 379,400

4.5 REQUIREMENTS
Regulations affecting production
i) Safety regulation
Because accidents are unpredictable the business will provide the following safety
regulation
a) Individuals those who have skills shall only operate the machines
b) Alarms shall be installed so that in case of any fire people will be alerted
c) Fire extinguishers
d) Every worker must wear shoes, goggles in order to prevent injuries that might occur
form sharp objects.
ii) Health regulation
The business will ensure that employees will be in good health and for the care of
sickness medical assistance will be provided through establishment of the health center
and clinics.
First and kit will be provide to deal with first aid regulation
Smoking is out of bounce
Ventilation lighting and sanitation will be catered for this ensure for the good working
environment for the staff and the workers.
iii) Government regulation
Before the operation of the business the management is required to have a trading license
obtained from the county council

4.6 PERFORMANCE ANALYSIS

This is based on the qualification or the management team also the performance is measured by
the education level of the team. The manager who is the head keeps the records of the
performance which helps during the analysis of the performance
4.7 ACTION PLAN
25
This plan will help show the activities to be carried out in the business and facilities required and
their capacity also the production process of furniture for example designing process. The
business will decide to use best quality products with their price relatively good. There are also
regulation affecting production for example safety regulation for example alarms shall be
installed so that incase of fire people can be alerted, fire extinguisher and a tool box will be given
to every carpenter to keep sharp objects like nails chisels and health regulation to ensure that
employees are in good health.

CHAPTER FIVE
5.0 FINANCIAL PLAN

5.1 OBJECTIVES
i) This is the plan that will assist to guide on the use of finance. The main objective of this
enterprise is growing faster for various expansions
ii) To ensure that the starting capital is successful hence the business meet the target and ensure
that the is proper management of the project
iii) To ensure that the enterprise make sale and maximizes profit
Iv) To help show the preoperational cost and expenses of the business

5.2 CAPITALIAZATION INVESTIMENT

PROPOSED CAPITALIZATION

26
 Source Amount
Bank loan 800,000
Family/friends 100,000
Owner equity 500,000
Contributions 200,000
Total investment 2500,000

5.3 DESIRE FINANCING

Items Amount
Working capital cost 260000
Pre operation 100000
Fixed assets 57000
Total desired finance 417000

The above table shows the amount of capital required for the start of the business

5.4 PRE OPERATION COST

Items Cost
Insurance 16000
License and permits 75000
Electricity installation 12000
Water bills 10000
Telephone and postage 10500
Advertisement 8500
Machines and equipment 6500
Miscellaneous 20000
Transport 100000

Totals 566200

27
Also the cash flow shows expenses incurred

5.5 OPERATION EXPENSES

This is show in the table below for the first month of the operation
Items Cost ksh
License 30000
Interest and loan 6000
Electricity 4000
Telephone 11000
Internet service provide 30000
Insurance 5000
Water 3000
Promotion and advertisement 2000
totals 64000

Therefore the total production cost per month will be overhead plus labour cost plus material
cost

28
Total production ksh=64000+2000+4000
=124000

5.6 PERSONAL EXPENSES

The working capital will be ksh 1400000 required to converted for fixed and valuable cost of the
business and start up capital will be ksh 2100,000
The project capital which the owner manager intend to invest is as follows

5.6.1 Production cost

Total cost will be rated at ksh. 90000. This will be used to pay employees

5.6.2 Material cost stock

The total cost to purchase material for the first month will be ksh80000

5.7CASH FLOW STATEMENT

The flows on the future movement of the cash into and out of the business thoroughly receipt and
progress. In the causes of the business operation there is the income revenue received from
sales collected from the debtors or other sources.
They constitutes to cash flow is projected yearly or quarterly basis. Cash flow projection for
workshop for the year (2017 year 1).

29
30
 5.7.1 CASH FLOW PROJECTION FOR YEAR 2017

PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Cash flow
Balance b/f 212400 18200 177000 183500 184000 18370 184100 187000 19000 195000 194300 500000
0 0 0
Bank loan 50000 500000
Cash invested 600000 600000
Sales 280000 28500 293400 291100 288075 29642 299495 302515 30683 307375 307375 3272855
0 5 5
Debtors 101225 116175 13002 131000 131900 132900 13320 134100 135000 13530 136200 1417025
5 0 0
Total cash flow 967600 593625 58317 602425 605600 603025 61303 616795 623615 63183 636975 635835 7732480
5 5 5
Cash out flow
Purchase 100000 110000 10500 120000 121000 12000 11900 129000 132000 13500 140000 145000 1476000
0 0 0
Insurance 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 120000 144000
Machinery 422200 4222000
&equipments
Salary &wages 210900 210900 21090 210900 210900 210900 21090 210900 210900 21090 210900 210900 2530800
0 0 0
Electricity 10000 5700 5500 5550 6100 6200 5900 5950 5700 5700 5700 6000 74000
Tele postage 1000 6080 6200 6250 6225 6300 6350 6450 6000 6200 6300 6310 56920
Water 8000 4000 4100 4200 4350 4500 4400 4220 4600 4900 4450 5000 214150
Transport 7500 5000 3000 2000 2400 2100 2200 2200 3000 17800 38150
Stationary 171875
Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625
Advertisement 30000
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
License/permit 6500 6500
Furniture/fittings 40000 40000
Creditors 10000 15000 15500 15900 15800 15750 1600 16100 16500 16500 1700 17500 185500

31
Miscellaneous 3000 2900 2950 3000 3200 3100 2800 2700 27900 2750 3000 3000 348900
Total cash output 887600 411625 40417 418925 421600 420275 42892 429795 428925 44197 448635 558468
5 5 5 0
Ending cash flow 212400 182000 17960 183500 184000 183700 18410 18700 19000 19430 195000 205200 2147800
0 0 0

5.7.2 CASH FLOW PROJECTION FOR YEAR2018

CASH FLOW STATEMENT FOR THE 2018 (YEAR TWO)
PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Cash flow
Balance b/f 205200 206500 208100 211000 212500 212500 214200 21900 21900 221300 222500 223400 2569900
Bank loan
Cash invested 500000 500000
Sales 330100 331300 332700 334000 335200 335200 337100 340200 340500 34800 342100 3444300 4041600
Debtors 149750 139125 140875 141255 142475 1424775 143475 147325 144125 144275 143850 145725 1722855
Total cash flow 485 677525 687675 686255 690175 690175 694775 703825 703625 705575 708450 713425 8834385
Cash out flow
Purchase 140000 155000 157000 160200 1622500 162500 162800 160000 165100 166400 167300 170700 1925300
Insurance 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 240000
vehicles
Salary &wages 210900 210900 210900 210900 210900 210900 210900 210800 210900 210900 210900 210900 210900
Electricity 6000 6200 5900 6300 6350 6350 6250 6100 6000 6100 5900 6100 73900
Tele postage 6300 6450 6300 6500 6400 6400 6250 6100 6000 6100 6175 6250 75125
Water 5000 5100 5150 5300 5450 5450 5500 5000 5650 5000 5350 5400 63450
Transport 21000 21200 2200 19500 29000 20000 20500 21000 22300 2000 23500 2400 257900
Stationary 3000 3100 2900 3250 3200 3200 3300 3050 3300 3050 3000 3150 37650
Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 187500
Advertisement
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
License/permit 1000 1000
Furniture/fittings
Creditors 16000 16200 16300 16800 16800 17500 17500 17450 17500 17600 17500 17700 203750

32
Miscellaneous 3200 3150 2850 2910 17000 1700 17450 17450 17500 17600 17500 17700 203750
Total cash output 478525 469425 4721025 473785 475975 475915 484475 484825 184325 484075 485050 46325 624585
Ending cash flow 206500 208100 21100 212500 214200 214200 219000 21900 221300 222500 223400 124100 2458800

5.7.2 CASH FLOW PROJECTION FOR YEAR2019

CASH FLOW STATEMENT FOR THE 2019 (YEAR THREE
PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Cash flow
Bala b/f 224100 33010 228400 232700 234300 23620 237900 239200 24360 241200 24727 245000 2840475
0 0 0 5
Bank loan
Cash invested 800000 - - - - - - - - - - - -
Sales 384000 38720 363100 388400 381300 38010 372200 376900 37530 373900 37270 3711200 454300
0 0 0 0
Debtors 138025 13040 129960 131435 130925 13219 126635 126895 12553 124125 16532 126635 1584670
5 5 5 5
Total cash flow 725225 15606 729585 734895 737835 73961 750195 751425 75542 756660 75990 772500 9773445
5 0 5 5
Cash out flow
Purchase 210300 20150 200200 186600 185400 17500 179100 177300 17590 174000 17230 170000 2207600
0 0 0
Insurance 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 264000
Vehicle 800000 800000
Salary &wages 210900 21090 210900 210900 210900 21090 210900 210900 21090 210900 21090 210900 2530800
0 0 0 0
Electricity 6800 6750 6300 6400 6400 6650 6775 6950 6800 6200 6500 6700 79275
Telephone/ 6800 6750 6300 6400 6550 6650 6670 6310 6500 6520 6410 6350 79275
postage
Water 6700 5670 5550 5450 5800 5810 5770 5650 5800 5750 5700 5500 68150
Transport 2100 21200 22000 19500 19500 20000 20500 21000 22300 2000 23500 24000 257900
Stationary 3000 3100 2900 3250 3250 3200 3300 3050 3300 3050 3000 3150 337650
Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 187500
Advertisement - - - -- - - - 1000 - - - - 1000
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000

33
License/permit 1000 - - - - - - - - - - - 1000
Furniture/fittings - - - - - - - - - - - -- -
Creditors 16000 16200 16300 16800 16800 17500 17500 17450 17500 17600 17500 17700 203750
Miscellaneous 38,000 3200 3150 2850 2950 2910 17000 17450 17500 17600 17600 17500 2037500
Total cash output 4955125 47852 469425 472102 473785 47378 475975 484475 48482 184325 48407 48325 624585
5 5 5 5 5
Ending cash flow 206500 20810 211000 212500 212500 21450 21900 21900 22130 222500 22350 224100 2588800
0 0 0 0

34
5.8 PROFOMA INCOME STATEMENT
The statement below will shown the project of the business sales cost products and expenses that
the business will incur before obtaining the net projection

items 1ts year 2nd year 3rd year

Income sales 4041600 3272855 141705
Debtors 4545300 1584670 1722885
Total 85866900 4857520 1864590
Expenses
Salary/wage 2530800 1925300 3000
Purchases 147600 2530800 42750
Electricity 74000 75125 77275
Telephone/postage 79000 73900 3530800
Water 56000 37650 79275
Stationeries 38000 63450 2207600
Advertisement 30000 25000 68150
Totals 4285455 4721225 5035795
Net profit before 405455 10332360 1094175
tax 20% 81091 266475 218835
profit after 324364 1065888 875340

35
5.9 PROFOMA BALANCE SHEET
This section of the financial plan who the financial of the business by the relationship between
assets liabilities and owners equity contribution into the business at a particular period. The
equity and liabilities are used to finance the acquisitions of the business assets
Balance sheet as at 31st January 2017, 2018 and 2019

Items Year 2017 Year 2018 Year 2019

Fixed assets
Machinery/equipment 462200 10000
Vehicle 500000
Land 810000
Total fixed assets 6000000 500000 800000
Current asset
Cash at hand 462200 1722885 1584670
Debtors 1417025 500000 800000
Cash sale 1476000 1925300 2207600
Purchases 4545300 4471600 4545300
Totals 8,187,785 913757
Assets 869785 238950
Total assets
Liabilities 994750
Creditors 187550 203750
Bank loans 1500000 79275
Owners equity 500000 2000000 2200950
Electricity bill payable 56000 73000 68150
Capital 74000 5130925 800000
liabilities 5432495 63450 5988060
tax payable 429560 517760 573135
500000 700000 573135
Total liabilities 8680525 8689785 994757

36
5.10 BREAK EVEN POINT (B.E.P) ANALYSIS.
This is the point at which the expenses of the owners much the sales ie when income equals the
expenditure.

Items Year 1 Year2 Year3

Variable cost
Electricity 79585 73900 77220
Telephone/postage 7400 75125 79275
Water 56920 63450 68150
Transport 34890 37650 285550
Stationary 214150 257900 30750
Advertisement 38150 36910 42750
Miscellaneous 30000 25000 30000
Total variable cost 527095 369935 625795
Fixed cost
Insurance 171875 187500 264000
Rent 78875 240000 78000
Loan 144000 78000 140625
Salary/ wages 2530800 2530800 253080
Total fixed cost 2924675 3030300 3073425

1st year
Contribution margin =total cost
3,272,885-527,095=2,745,760
%contribution margin =contribution margin x100
Sales
=2745760x100
3272855

Break even point- fixed cost

37
(sales-variable cost)
Sales

=2,924675

=3272855-5272095
3272855
2 year

Contribution =sales – total cost

=4041600-569735
=3471665

% contribution= contribution margin x100

Sales
=341665x100
4041600
=85.9%
Break even point = fix cost
=sales – variable cost
Sales
=3036300
4041600-56935
3036300
=3534774

3 year
%contribution margin = contribution margin x100

38
 sales
= 3919505x100
= 4545300
86.2%
Break even point =fix cost

Sales-variable cost
sale
= 3013425
=4545300-625955
4545300
=3494555

5.11 PROFITABILITY /PERFORMANCE RATION

39
ITEMS 1ST YEAR 2ND YEAR 3RD YEAR
Gross profit ratio 404425x100 10033260x100 1094175x100
=gross profit x100 3272855 4041600 4545300
Sales
=12.4% =25.% =24.1%

Net profit after tax

x100 323540x100 826608x100 875340x100
Sales 3272855 4041600 800000
=9.90% =20.4% =109%

Return profit ratio 323540x100 826600x100 875340x100

=net profit after tax 800000 404600 2500000
x100 40.4% 25.4% 35%
Owner equity

323546x100 826608x100 875340x100

2500000 500000 2500000

Return on investment 12.9% 33.1% 35%

=net profit after tax

x100
Total investment

40
5.12 ASSUMPTION
Since the business is located at Kisii town its expected to serve several hospitals schools
companies hotels customers from the outskirts and therefore it will commerce on January 31st
2012 the business is expected to sale its product goods to the clients of the first year of the
operation and as time goes it will offer credit service to its client in order to attract and retain
customers
Also the business will expect that the provision for tax will retain 20% for the coming three year
and also the enterprise will expect the debtors to honor their debtors promptly.

5.13 ACTION PLAN

This plan is all about cash flow in that it involve the strategies and demand a business will follow
so as to match is target and objective this also involve the proposed capitalization to start up the
business and insurance and how much they cost also the income statement will the projection of
the business sales cost products and expenses the business will incur before obtaining net profit
and the point at which the expenses of the owner will match the sales for example when the
income equal the expenditure

41
 CHAPTER SIX
6.0 ECONOMY
Due to the increase to economy the business has to be in a town due to the expansion of
institution schools hospitals hotels churches companies and the town it self growing drastically
because the technology the business will expect to capture most of its clients since it deal with
the production of furniture this is why the business is expected commerce on January 1st 2012.
Due to the high population around the town and outside neighbouring

6.1 INDUSTRY
The business falls under the production industry the industry has as been very effective because
the importation of timbers from South Africa into the country and has given local industry for the
case the government has discouraged this kind of importation and has given the local industry an
opportunity to produce the products. The industry would also like to be role model to other
industries that is by discouraging all sort of corruption and doing work of production into
perfection orderly uniformity and promoting the nature of the country

6.2 LOCATION VALUE

The proposed business will be located in Kisii town opposite municipal market. The business
will majorly value in the production of furniture and its main intention is to commerce on
January 1st2017. The start and the working is expected from bank loans owner equity.

6.3 MARKETING
For the proper serving and growth of the business it must have a stable market to achieve this
stableness market the business must win the customers by approaching them
Marketing will be done through selling quality products and services and also offering
incentives. This will be done through advertisement this is create the awareness of its products
and this will be done through mass media which involves use of radio and television using
channel that will reach all the potential customers we will also use the newspaper magazines and
by drawing up displays.
Promotion will be done in order to facilitated increase of sales and this will be through trade fair
exhibition free colanders snap frame cardboard black boards and chapatti rollers

42
Lastly marketing will be done through direct distribution to its customers by use of hired pick up.
The business has set up their goals in one year time after the start of the business they will
purchase their own business pick up.

6.4 OPERATION
The operation plan is describe by a channel to be employed so as to ensure that the customer
needs and preference are met. The most effective way of producing will be applied in proportion
to the capital to be invested. The operational cost may include the flowing licenses, insurance,
water, bills, electricity and advertisement

6.5 FINANCIAL
For any business to exist proper financial plan should be put in place in sheet it will help in the
allocation and accounting of financial relation to the allocation and accounting of financial
relating to the business income and expenditure the pre-operation cost proper income statement
breaks even points analysis and business profitability ratio will be show in the financial plan. The
business will receive capital from owner’s equity loans from friend contribution and family

6.6 SECURITY
Since the business will be located in Kisii town opposite municipal market then it will be
sufficient security of the enterprise the business will also install the fire extinguisher at the exit
and employ watchmen for the proper security since the watchmen will carry out inspection every
time when the is taking place

6.6 OTHERS
There are other carpentry workshop which provided related services to the industry production
for example Nyanza carpentry workshop minto hill carpentry workshop and pema wood joinery
for effective production there are some proper involved for example rolling of timber shining and
painting of color the operation personnel organize the work process and it re-organized it as per
the instruction of the customers.

43
6.8 RISK ANALYSIS
The business will carry out risk analysis so as to the business to expand. Risk analysis may
involved the installation of fire extinguishers to be used incase of the fire outbreak and lastly
thick walls should be erected to prevent fire incase of an outbreak lastly ensure the business
again any loss for example theft fire and flood

44