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Retail Hardware Store Business Plan
Retail Hardware Store Business Plan
Retail Hardware Store Business Plan
FACULTY: ENGINEERING
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Table of Contents
Title Page..................................................................................................................................................i
Table of Contents....................................................................................................................................ii
RETAIL HARDWARE STORE BUSINESS PLAN.................................................................................................1
1.0 EXECUTIVE SUMMARY................................................................................................................1
Business Objectives.............................................................................................................................1
Mission Statement...............................................................................................................................1
Guiding Principles................................................................................................................................1
Key to Success......................................................................................................................................1
2.0 COMPANY DESCRIPTION........................................................................................................................2
2.1 OWNERSHIP....................................................................................................................................2
2.2 LEGAL FORM..................................................................................................................................2
2.3 START UP SUMMARY....................................................................................................................2
2.4 LOCATION AND FACILITIES........................................................................................................3
3.0 SERVICES................................................................................................................................................3
3.1 DAILY OPERATIONS AND PRODUCTION..................................................................................3
3.2 COMPETITIVE COMPARISON......................................................................................................3
3.3 SUPPLIERS......................................................................................................................................4
3.4 MANAGEMENT CONTROLS.........................................................................................................4
3.5 ADMINISTRATIVE SYSTEM.........................................................................................................4
4.0 MARKET ANALYSIS.................................................................................................................................5
4.1 Market Trend.....................................................................................................................................5
4.2 Market Size........................................................................................................................................5
4.3 Market Growth..................................................................................................................................5
4.4 Main Competitor................................................................................................................................5
4.5 Target Market Segment Strategy........................................................................................................6
5.0 MARKETING STRATEGY AND POSITIONING............................................................................................7
5.1 Strengths............................................................................................................................................7
5.2 Weakness...........................................................................................................................................7
5.3 Opportunities.....................................................................................................................................7
5.4 Threats...............................................................................................................................................7
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5.5 Positioning Statement........................................................................................................................7
5.6 Pricing Strategy.................................................................................................................................7
5.7 Market Program.................................................................................................................................7
6.0 ORGANIZATION AND MANAGEMENT....................................................................................................8
6.1 Organizational Structure....................................................................................................................8
6.2 Management Team.............................................................................................................................8
6.3 Managing Team Gaps........................................................................................................................8
6.4 Future Service....................................................................................................................................8
7.0 FINACIAL PLAN.......................................................................................................................................9
7.1 Source and Use of Funds...................................................................................................................9
7.2 Projections.......................................................................................................................................10
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RETAIL HARDWARE STORE BUSINESS PLAN
1.0 EXECUTIVE SUMMARY
The Javah Hardware will be a moderately priced hardware located along the Kakamega-Mumias
road, offering goods and services to its customers. Products such as cement, steel bars and rods,
white cement, roofing sheets, door hinges, roofing nails, flooring tiles, welding rods among
others will be available.
The hardware will be family owned and operated by Samson and Samuel Namondo. Together
they have 3 years of experience in sales and marketing. The site location was previously a
bookshop, owned by Justus. The location will therefore require some additional renovation
before fully acquiring it.
Sales projection assume customers per week resulting in weekly sales of just over Ksh.20, 000 or
Ksh.950, 000 annually. This will lead to much profit hence the idea is good to venture in.
Total stand-up cost will Ksh.700, 000 of which Ksh.300, 000 will be contributed by the owners
and the remainder will be secured by a proposed bank loan and grants.
Business Objectives
To be the premier local hardware along Kakamega region
To promote quality hardware products at reasonable prices
To provide exemplary services to our customers
To achieve price cost ratio lower than 65%
Mission Statement
Our mission is to provide quality products and services to our customer’s satisfaction. This
will be achieved by having enough stock of the products.
Guiding Principles
Treating our customers with much respect that they deserve
Being mindful of our staff and respecting them
Providing quality service to our customers
Key to Success
-Hiring a salesman to be going around the region scouting for any new upcoming sites.
-Locating the business where it is accessible to the main road to reduce the transport cost to
our customers.
-A variety of products at affordable prices
-Employing qualified and highly skilled employees
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2.0 COMPANY DESCRIPTION
The Javah Hardware will be located along Kakamega-Mumias road, next to Jamal Filling
Station, 7 kilometers from Kakamega Town. The hardware will be owned and operated by
Samson and Samuel Namondo. It will provide products such as cement, steel bars, nails, door
hinges, paints, glass panes, pipes, roofing sheets, etc. and offer services such as delivery
services to customers. The hardware will operate for six days in a week as follows:
2.1 OWNERSHIP
The hardware will be owned by Samson and Samuel Namondo. Both are sales and marketing
graduates from Masinde Muliro University of Science And Technology and have three years
of experience in storekeeping and marketing of products. They both worked for Bamburi
Cement Company as sales persons for one and a half years and one year respectively.
Due to demand for more labor in the hardware, we will require the family to fill in where
possible until we are off the ground and making a profit.
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2.4 LOCATION AND FACILITIES
The 2,300 square foot hardware will be located in Kakamega County along Kakamega-
Mumias road, 7 Km from Kakamega town.
The hardware is located in the major traffic area at the intersection of Kotecha Road and
Mumias Road.
The region has a population of over 45,000 people according to the year 2,000 Census Report
of Kenya. The residential population in the immediate area is comprised of a mixture of
single families, students and multi-family housing.
3.0 SERVICES
3.1 DAILY OPERATIONS AND PRODUCTION
Javah hardware will be operated six days a week. Lunch and dinner will be provided by the
owners. Samson will write the schedules.
Proper labelling and rotation techniques, accompanied by ample storage facilities will ensure
that high quality prepared products will be sufficiently available to meet the demands during
business hours.
Samuel will be responsible for ordering, receiving and manufacturing sufficient inventory to
meet the production demand.
Stocktaking exercise will be done after every two weeks. This will help us understand which
products are moving fast off the shelves as which ones need immediate restocking.
3.2 COMPETITIVE COMPARISON
Kakamega region is made up of thirteen hardware stores. Major stores include: Nabongo,
Pramukh, Walias and Mugo general stores.
The nearest competitors are Nabongo hardware and Mugo general stores. Nabongo’s
hardware is a sole proprietorship with six employees and generates 1.2 million shillings
annually.
Mugo general stores is located within the target market of Kakamega-Mumias road but deals
with a wider variety of products apart from only those required in the hardware. Its profit
ranges between 1.5 to 2.0 shillings annually.
3.3 SUPPLIERS
Because of their years of experience and knowledge acquired in college, Samson and Samuel
Namondo have established relationship with Bamburi Cement Company as their main
supplier of cement. They also have a relationship with Eston pipe manufacturers. These
suppliers can provide reasonably priced products, delivered according to their schedule.
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3.4 MANAGEMENT CONTROLS
The Namondos will practice sound management procedures in order to control costs, ensure
quality of products and provide friendly customer services. The following system will be
used by management:
1) Order guide: the hardware will use an item specific order guide to track order history
and maintain designated levels of products in inventory.
2) Weekly inventory: management will conduct a weekly inventory to determine the
evaluation for use in the preparation of weekly projects and job reports.
3) Daily inventory tracking: daily inventory will be taken on specific items. Movement
will be compared to sales data to ensure designated products have been properly
accounted for.
3.5 ADMINISTRATIVE SYSTEM
With a limited staff, it’s crucial that sums remain current with daily cash outlay. The purchase
of Point Of Sale system (KRA ETR machine) will immensely help them with the use of daily
administrative reports.
1) Daily cash control
Sales and receipts recorded by the POS system will be compared to actual cash and credit
card deposits on a daily basis. Acceptable over/short amounts will be limited to Ksh 500 per
day. Discrepancies greater than 500 will prompt management to conduct an immediate audit
to account for the difference. Monthly totals will be compared to actual profit and loss
account, statement for accuracy. Cash, debit card and credit card receipts will be deposited in
a deposit.
2) Purchasing records/payables
A part time bookkeeper will process and record invoices and credit daily. Reports detailing
cash expenditures, payments by cheques and amount payable transactions will be readily
available.
Cheques disbursements will be prepared by the bookkeeper. Cheques signing authority for
the general operating will be given to the general manager.
3) Payroll processing
Payments will be done according to the time and attendance system. Samson will make
necessary adjustments and prepare the payroll
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On a typical day in Kenya over 800,000 people will need products that relate to hardware.
Sales at fully equipped hardware reached up to 5 million in 2013. Sales at a limited serviced
hardware reached Ksh. 230,000 a day in 2015.
Kakamega County is made up of 11 hardware with combined annual revenue of about 3
million. The major hardware in the region are Pramukh Hardware, Nabongo Hardware and
Walias Hardware.
4.1 Market Trend
According to the National Hardware Stores Association, the top 10 rated products found in a
hardware are;
1. Cement
2. Roofing Sheets
3. Roofing nails
4. Steel bar and rod
5. Door hinges
6. Flooring files
7. Welding rods
8. Plumbing materials
9. Window glasses
10. Barbed windows/ fencing wires
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4.5 Target Market Segment Strategy
Samson and Samuel Namondo selected the subject area for the hardware to be along the road
primarily because the area was populated and is accessible to the main road. The hardware is
at the region where much of construction works goes on. This will encourage our customers
since it will help to reduce transport costs.
The major employees in the region are Masinde Muliro University and the county
government of Kakamega.
The income rates of the residents of that region can be estimated as shown in the pie chart
below;
Salaries ( monthly)
8%
1st Qtr
11%
2nd Qtr
3rd Qtr
50% 4th Qtr
31%
We realized that the hardware business will have to be achieved by doing more than just
providing products at an affordable prices. We will utilize a marketing plan to build customer
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traffic. We will also strive to win more customers by being productive rather than reactive in
our marketing efforts and stay current with popular industry trends.
5.1 Strengths
Prime location with easy access
Exceptional staff with the ‘can do’ attitude
Affordable product prices
5.2 Weakness
Recruiting and retaining quality employees
Tight margins will allow little wiggle room for errors
5.3 Opportunities
Little barriers to entry allow for immediate business opportunity
Offering additional delivery service
5.4 Threats
Government mandate (workers’ health, sanitation, fire extinguishers)
Building and Maintaining sales volume
Rising operating cost
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will be rated and evaluated according to the pre-defined set of standards designs for each
positions.
6.2 Management Team
The hardware will be owned by Samson and Samuel Namondo. Both are graduates with
degree in Sales and Marketing.
6.3 Managing Team Gaps
Initially, Samson and Samuel will fill many of the management gaps. Over time, they have
plans to hire a sales director, a general manager and a store keeper.
To meet the gap associated in payroll, inventory management and cost accounting, the
Namondo will purchase a Point of Sale System (POS) that simplifies most of the
communication between the members of the staff.
The POS will also acts as a clock and help in preparing payrolls.
6.4 Future Service
Javah hardware has future plans to expand its branches to Mumias and Webuye towns.
It will also provide a wider variety of products to increase the sales and profits. The Javah
hardware is targeting that in 1.5 years, it will have a sales agent who can market the products
and a truck driver to deliver products to our customers.
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The table below shows the Start-Up Cost:
Table 7.0 Start-Up Costs
Start-Up Expenses Amount
Starting Stock Ksh. 500,000
Rent and Deposit Ksh. 50,000
Single Business Permit Ksh. 500
KRA ETR Machine Ksh. 10,000
Other Minor Requirements Ksh. 140,000
TOTAL Ksh. 700,000
7.2 Projections
Projected Profit and Loss demonstrates modest increase in revenue over the three expected
years with adjustments for inflation.
Table 7.3 Pro Forma Profit and Loss
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