RIFT VALLEY TECHNICAL TRAINING INSTITUTE

INSTALLATION OF ELECTRIC SECURITY

DOORS

TITLE: INSTALLATION OF ELECTRIC SECURITY

DOORS PRESENTED BY: BENSON CHERUIYOT LANGAT

INDEX NUMBER: 5341011236

COURSE CODE: 2502

CENTRE CODE: 534101

SUPERVISOR: MERCY FIONA

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILLMENT FOR AWARD OF DIPLOMA IN MECHANICAL ENGINEERING

(PLANT OPTION)

EXAM SERIES: NOVEMBER 2021

i
DECLARATION
I hereby declare that this project is purely the true copy of my original research work and that no
part of it has been copied from elsewhere.

STUDENTS NAME: BENSON CHERUIYOT LANGAT

SIGNATURE……………………………….....
Date…………………………….

The business plan has been submitted to the Kenya examination council (KNEC) with my
approval as the supervisor

Supervisor declaration
NAME: MERCY FIONA
SIGNATURE……………………………
DATE…………………………
 DEDICATION
I would like to dedicate this project to my loving and caring Dad and Mum who gave me
financial as well as moral support throughout my course.
Special thanks to my brothers, sisters, classmates and my friends for their support. May God
bless you in every good work, Amen.
 ACKNOWLEDGEMENT
I gratefully acknowledge the guidance and encouragement accorded in the preparation and final
production of this project by my friends and college
My particular thanks go to my supervisor, my college mates and all of whom offered
contribution and invaluable advice and criticism
Thanks are also due to the entire lectures and staff of the department of who gave me
encouragement and advice every time I was in need.
To the library staff who tirelessly arranged books in orders thereby making access to books at
time of need, I express my gratitude to you all. To all those and others who helped me in one
way or the other during my preparation and final production of these project. I express my
gratitude.
 Table of Contents
DEDICATION.............................................................................................................................................i
ACKNOWLEDGEMENT.............................................................................................................................iv
CHAPTER ONE..........................................................................................................................................1
1.1 EXECUTIVE SUMMARY......................................................................................................................1
1.2 BUSINESS DESCRIPTION....................................................................................................................1
1.3 MARKETING PLAN.............................................................................................................................1
1.4 ORGANIZATION AND MANAGEMENT PLAN......................................................................................1
1.5 PRODUCTION AND OPERATIONAL PLAN............................................................................................2
1.6 FINANCIAL PLAN................................................................................................................................2
CHAPTER TWO.........................................................................................................................................3
2.0 BUSINESS DESCRIPTIION....................................................................................................................3
2.3.1 BUSINESS OWNERSHIP...................................................................................................................5
2.3.2 FORM OF PWNERSHIP...................................................................................................................5
2.3.3 OWNERS PROFILE..........................................................................................................................6
2.3.4 CAPITAL REQUIREMENT.................................................................................................................6
2.4 TYPE OF BUSINESS.............................................................................................................................6
2.5 PRODUCT/SERVICE............................................................................................................................6
2.6 JUSTIFICATION AND OPPORTUNITY..................................................................................................7
2.7 INDUSTRY..........................................................................................................................................7
2.8 BUSINESS GOALS AND OBJECTIVES...................................................................................................7
2.8.1 SHORT TERM OBJECTIVES..............................................................................................................7
2.8.2 LONG TERM GOALS........................................................................................................................8
2.9 ENTRY AND GROWTH STRATEGY......................................................................................................8
2.9.1 ENTRY.............................................................................................................................................8
2.9.2 GROWTH STRATEGY.......................................................................................................................8
CHAPTER THREE.....................................................................................................................................10
3.1 MARKETING PLAN...........................................................................................................................10
3.2 POTENTIAL CUSTOMERS.................................................................................................................10
3.3 MARKET SHARE...............................................................................................................................11
3.4 COMPETITION.................................................................................................................................12
3.5 PRICING STRATEGY..........................................................................................................................12
3.5.1 ADVERTISING AND PROMOTION STRATEGY.................................................................................13
3.5.2 ADVERTISING................................................................................................................................13
3.5.3 PROMOTION................................................................................................................................13
3.6 SALES TACTICS.................................................................................................................................13
3.7 DISTRIBUTION STRATEGY................................................................................................................13
CHAPTER FOUR......................................................................................................................................15
4.1 ORGANIZATIONAL AND MANAGEMENT..........................................................................................15
4.2 ORGANAZATIONAL STRUCTURE......................................................................................................15
4.3 KEY MANAGEMENT PERSONNEL.....................................................................................................15
4.4 RECRUITMENT, TRAINING AND PROMOTION.................................................................................16
4.4.1 RECRUITMENT..............................................................................................................................16
4.4.2 TRAINING.....................................................................................................................................17
4.4.3 PROMOTION................................................................................................................................17
4.5 RENUMERATION.............................................................................................................................17
4.6 LEGAL REQUIREMENT.....................................................................................................................18
4.7 SUPPORT SERVICES.........................................................................................................................18
CHAPTER FIVE........................................................................................................................................19
5.1 PRODUCTION AND OPERATION PLAN.............................................................................................19
5.2 OPERATIONAL FACILITIES AND EQUIPMENT...................................................................................19
5.2.1 FACILITIES.....................................................................................................................................19
5.2.2 EQUIPMENT.................................................................................................................................19
5.3.1 PRODUCTION AND OPERATIONAL STRATEGY...............................................................................20
5.3.2 PRODUCTION / SERVICE DESIGN...................................................................................................20
5.3.3 PRODUCT / SERVICE DEVELOPMENT...........................................................................................20
5.3.4 MONTHLY MATERIALS REQUIREMENTS.......................................................................................20
5.3.5 MONTHLY LABOUR REQUIREMENTS.............................................................................................20
5.3.6 MONTHLY PRODUCTION / OPERATION COST..............................................................................20
5.4 PRODUCTION / OPERATION SERVICES............................................................................................21
5.5 REQULATIONS AFFECTING OPERATIONS / PRODUCTION................................................................21
5.5.1 Trademarks patents and copyrights.............................................................................................21
CHAPTER SIX..........................................................................................................................................23
6.1 FINANCIAL PLAN..............................................................................................................................23
6.2 PRE – OPERATION EXPENSES..........................................................................................................23
6.3 WORKING CAPITAL FOR ELDORET STANDARD ELECTRICAL SUPPLIER FOR
THE FIRST THREE YEARS (2015, 2016 AND 2018)...................................................................................24
6.4 LOAN REPAYMENT SCHEDULE.........................................................................................................25
PROJECTED CASH FLOW ELDORET STANDARD ELECTRICAL SUPPLIER ROR THE
YEAR 2018..............................................................................................................................................26
PROJECTED CASH FLOW FOR ELDORET STANDARD ELECTRICAL SUPPLIER
OFFICE ROR THE YEAR 2018...................................................................................................................27
PROJECTED CASH FLOW FOR ELDORET STANDARD ELECTRICAL SUPPLIER ROR
THE YEAR 2018......................................................................................................................................28
6.5 PROFORMA INCOME STATEMENT FOR ELDORET STANDARD ELECTRICAL
SUPPLIER FOR THE YEAR 2018, 2019 AND 2020....................................................................................29
6.6 PROFORMA BALANCE SHEET FOR ELDORET STANDARD ELECTRICAL SUPPIER
FOR THE YEAR ENDING DECEMBER 2018, 2019 AND 2020....................................................................30
BREAK EVEN POINT FOR STANDARD OFFICE EQUIPMENT FOR THE YEAR 2018,
2019 AND 2020......................................................................................................................................31
6.7 PROFITABILITY RATIOS FOR YEAR 2018, 2019 AND 2020.................................................................32
6.8 DESIRED FINANCING.......................................................................................................................32
6.9 PROPOSED CAPITALIZATION............................................................................................................33
 CHAPTER ONE

1.1 EXECUTIVE SUMMARY

1.2 BUSINESS DESCRIPTION

The proposed business venture is called electrical door installation and suppliers. The name is
derived from an English word which means it is of require degree , the word generally means
variety of required degree of some quality measurement , size, type and model of equipments all
available so people are sore of getting what they intend to purchase. The business will be situated
at Eldoret town in Uasin Gishu County.
The following is the contact address of Eldoret standard electrical supplier
LANGAT GENIUS
ENTREPRISE PO BOX 95 –
30502
ELDORET
TEL: 043 – 24624

The business is a start up business owned by Benson Cheruiyot Langat, it will be a sole
proprietorship and its sole purpose is to offer quality services to its customers. The business will
fall under trade industry. The industry is well established in Eldoret town whereby its
competitors are changing from old methods to new technologies

1.3 MARKETING PLAN

The targeted potential customers are from neighboring colleges, hospitals, secondary schools,
primary schools, police stations, electricians and even the neighbours of the town that is
individuals. The proprietor will attract customers by offering variety of quality equipments and
make sure that the stock is enough for customers not to miss what they require

1.4 ORGANIZATION AND MANAGEMENT PLAN

The targeted business is a sole proprietor type of business. The key personnel will be the owner
(manager) and other personnel include salesman and cashier.
The manager will be having management skills and ownership skills and knowledge. The
salesman should have some knowledge due to past experience. He should be hardworking and
have courtesy when handling customers. The cashier should have knowledge on the fields of

1
accounts and ready to work throughout. Due to expected future expansion more personnel will

2
be employed. Monetary incentives such as salary advancement and allowances will be used to
motivate employees. All Government regulations pertaining employment will be observed

1.5 PRODUCTION AND OPERATIONAL PLAN

The operation of the whole business will be done by the owner manager who will make sure that
there is coordination of all activities in the business for example, to make sure that the re-order
level programmed is organized that is to order for a new stock at a certain point. The office
equipment operation must be competent, simple and clearly defined. It should also be understood
well by the employees and customers. The business will ensure that it increases the capacity of
sales since its main objectives is to maintain all potential customers and offering fair prices hence
good turn over.

1.6 FINANCIAL PLAN

The business will need about kshs 300,000 for just a beginning. According to the budget plan the
business will need the amount because its supposed to begin the operation. The owner depends to
borrow funds from the bank, friends and relatives and from savings. The break- even points will
be as follows;
For the year 2021 it will be 4,383.42
Savings for the year 2011 it will be 9153.02
Finally the year 2023 will be 6,359.53
The return on investment will be expected as 43.97%
 CHAPTER TWO

2.0 BUSINESS DESCRIPTIION

The proposed business will be falling under trade industry. It will be a sole venture engaged in
provision of quality electrical door and facilities.
BUSINESS NAME AND LOGO
The name given to the proposed business is Langat Genius Entreprise. The name is derived
from an English word which means fixing of doors that are electrically controlled.
It’s of required degree of some quality measurement, size type and model. Since customers will
have services that are satisfactory for instance good quality equipment given at quality time with
satisfying price. A usually good service gives customers morale to visit the work place.
PROPOSED CAPITAL
The proposed capital for the proposed business will be as follows or indicated below
ITEM AMOUNT
Owners contribution 100,000
Borrowing from relatives & friends 100,000
Bank loan 100,000
TOTAL 300,000

THE BUSINESS LOGO

QUALITY EQUIPMENT
BUSINESS LOCATION AND ADDRESS
The proposed business will be located along Eldoret-Nakuru road at a place called Rupa mall
Town opposite Moi Girls High School which is also 100. The place is proposed since it is near
above institutions and places like Rift Valley Technical Training Institute and Eldoret town
businesses. It has good infrastructure like the roads, telephone lines, buildings and high security.

BUSINESS ADRRESS
The following is the conduct address of Eldoret standard electrical supplier
LANGAT GENIUS ENTREPRISE
P.O BOX 95-
30502 ELDORET
TEL: 043-24624
 MAP

UGANDA ROAD K C B BANK

FROM NAIROBI

SANG MODERN
BARN’GETUNY PLAZA BOOKSHOP

COUNTY COUNCIL

POLICE
STATION

2.3.1 BUSINESS OWNERSHIP

2.3.2 FORM OF PWNERSHIP

The form of ownership of the proposed business is a sole proprietor type of business and
managed by the owner manager. Its sole propose is to offer quality equipment. The sole
proprietorship is perfected because of the following;
• Formation is fairly simple and requires few legal facilities to commence
• Proprietor enjoys all the profits alone
• It is prestigious to become a boss
• Small amount of capital is required
• Proprietor maintains the top secrets of the business
• Maintenance is simple
• Proprietor has direct personal conduct to customers
• Proprietor makes decisions quickly
2.3.3 OWNERS PROFILE
The proposed business will be owned by a resident from Eldoret who aged 24 years. The owner
is currently a student at Rift valley Technical Training Institute who is about to complete his
studies therefore processing entrepreneurial characteristics of having desires for responsibility,
confident in his ability to succeed, skilled in organizing, higher degree of commitment and
tolerance for ambiguity.

2.3.4 CAPITAL REQUIREMENT

The capital requirement for the business will be kshs 300,000 collected from personal savings,
friends, relative sand institutions. According to the budget plan the business will need this
amount because its supposed to have a variety of equipment to begin its operation.
The table below shows a summary on sources.
SOURCE AMOUNT
Personal 100,000
savings
Friends 25,000
Relatives 25,000
Banks 150,000
TOTAL 300,000

2.4 TYPE OF BUSINESS

Intended business will be selling and supplying electrical doors and installation service on
customer demands.Other electrical shops,electricians and Institutions can buy either in bulk or in
smaller quantities or units to use in there place of work or replace the old equipment. Customers
prefer electrical installation shop since they get them on time, equipment of good quality at a
cheaper price. The business is also near to the demanders hence reducing transport costs.

2.5 PRODUCT/SERVICE
The business is to be selling and supplying different types of electrical varieties in different
qualities and quantities. Some of the items will include; electrical door locks cables, switches,
sockets, circuit breakers, metres, meter boxes, flourescent lamps, bulbs, pliers, testors and many
others The business will offer free transport services, free samples which is usually captive sales
by use of salesmanship skills to persuade customers, educate them on the product features such
as price, quality thus winning customers confidence who will then buy. The business will use
showrooms to advertise the equipment and give detailed explanation trying to convince the
customers. Equipment offered will be of different shapes and sizes to suit the customer’s desire.
The equipments will be convenient enough, economical and comfortable and durable hence the
customers will be satisfied.

2.6 JUSTIFICATION AND OPPORTUNITY

The proposed business should exist to enable learning institutions, police station, hospitals and
homes to access equipments without any travelling expenses, also obtaining good quality
equipment at a cheaper price at a prescribed time.
The proprietor will serve as role model to the existing people in Eldoret who have
entrepreneurial skills but cannot exploit them or scan environment for opportunities due to
employment created people will be hired thus uplifting their standard of living and their local
indigenous technology will be promoted. Eldoret community will have met their unsatisfied need
of electrical quality equipments.

2.7 INDUSTRY
The trade industry is large in size there are some seasonal factors that affects the business, that is,
some people and institutions takes the equipments on credit and gives rough time following them
the industry present growth prospect since Eldoret standard electrical supply is the only place
offering quality equipments. Therefore the profits gained are high. The amount of capital
required for starting business in this industry is kshs 300,000 on average. The degree of
competition is moderate.

2.8 BUSINESS GOALS AND OBJECTIVES

The following goals give the proprietor target to aim at evaluating the business and helps to
know where business is going and how its performing.

2.8.1 SHORT TERM OBJECTIVES

• To employ two workers within six months
• To pay back the short term loan within six months
• To purchase a computer within a year to keep records in the shop
 2.8.2 LONG TERM GOALS
• To buy a pick up (3 tones) within three years
• To make tenders within five years
• To open branches in junction and roadblock center within 2 years.

2.9 ENTRY AND GROWTH STRATEGY

2.9.1 ENTRY
For the commencement of the business, proprietor should have
• SKILLS – this is the know how on ability to fact fully respond positively to a given
situation that is managerial skills and entrepreneurial skills
• CAPITAL- this is the finance needed to start the business shs 300,000. It enables the
entrepreneur to acquire tools and equipments for efficient operation
• PREMISES – it’s the buildings from where one operates by having a stable or
permanent station of work.
• MARKET – proprietor should know the group of potential customers of the equipment.
It can be people institutions of organizations. Knowing that the above has been obtained an
application to local authority is written for permission who will issue a trading license and the
business will kick off
• LEGAL DOCUMENT – for not breaking the law and avoid authority of confrontation.

2.9.2 GROWTH STRATEGY

Considering the growth pattern electrical door installation shop is to be expanded to create space
for more equipment stock thus covering a wider area including electrical works in langas. In
conjunction it’s yet to open two more branches one within the locality and another in the nearest
town that is Anex centre and pioneer respectively
SWOT ANALYSIS
STRENGHT WEAKNESS OPPORTUNITIES THREATS
Proprietor has Funds are limited There is room for The economy is poor
managerial skills further expansion
Demand for Limited experience Bank interest rate is
equipment is high high.
 CHAPTER THREE

3.1 MARKETING PLAN

Marketing objectives are as follows
• To develop and implement effective strategies in line with dynamic fixed prices forces in
the business environment as a means of ensuring success
• To identify and retain customers through the application of customer friendly as a means
of ensuring growth.

3.2 POTENTIAL CUSTOMERS

Customers are essential to any business concern electrical door installation shop will not be an
exception. Its customers will include;
1 Learning institutions
Learning institutions around these places like Eldoret Polytechnic,Eldoret R.C primary, West
Kenya prison and people around the community who are showing interest of having electrically
locked door in their homes will obtain their electrical equipment from my shop to enable them
run smoothly.
2 Hospitals and prisons
Moi teaching and referral hospital is aiming to put up two new buildings in next two and half
years. There is high opportunities to be given a tender of supplying electrical doors and
electrical materials. Eldoret police station is also planning to install improve its security, thus
having hopes of them being my customers.
3 Individuals
Some individuals and electricians will buy materials from my shop for use in their own homes or
their own places of work hence boosting my business.
4 Other businesses
Other businesses like Rupa mall will acquire equipment to be used in their organization. After
successful operation report oriented products will be launched in. therefore all customers are
expected to give a third of entire market. The targeted potential customers are learning
institutions who buys for their practicals. Individuals and other business will also buy. To
maintain these customers, the enterprise will ensure that equipment needed is reliable and
available always. Also customers will be attended promptly and nicely.
3.3 MARKET SHARE

Electrical door installation shop are expected to get 50% of potential customers at the start due
to high quality of its product and low price. It also has its own uniqueness and excellence of its
equipment. The proportion of the market served by other existing business is 55% potential
customers include Eldoret Polytechnic, RVTTI and others.
At the beginning of the year of operation Electrical door installation shop will have 45% of the
market and the remaining will be shared among the competitors of the business. This is
illustrated below;

Langat Genius Enterprise

KEY
MAKEMO ELECTRONICS AND ELECTRICAL ENTERPRISE

MUKHE ELECTRONICS

After three years the business intends to increase the percentage of market share from 45%to
55% than competitors because they offer very few goods compared to my shop

KEY

Langat Genius Enterprise

MAKEMO ELECTRONIC AND ELECTRICAL ENTERPRISE

MUKHE ELECTRONICS
 3.4 COMPETITION
The competitors of Eldoret standard electrical supplier are direct competitors because they offer
the same equipment. The only different is Electrical door installation shop ,offers and supplies
variety of equipment and of good quality to the institutions and even to other shops.
The proposed business will take advantage of competitor weakness by selling at a cheaper price
and handle competitors strength by employing experienced personnel, changing operating time
and clear equipment at the negotiated period

COMPETITION ANALYSIS TABLE

Business Form of ownership Time of Prices Advertisement Equipme Location
name operation nt
Langat Sole 6am – Affordabl They usually Modern Centrally in
Genius proprietorship 9pm e prices advertise their town
Entreprise products
Mukhe Partnership 8 am – High No advertising Old Within the
5pm prices town
Makemo Sole 9am – High No advertisement Old Within the
proprietorship 7pm prices town

3.5 PRICING STRATEGY

The proposed business will set reasonable price and customer friendly in order to ensure high
sales are realized the business will generate reasonable profits to inspire business growth. In
setting the price, competitor price, cost of manufacturing plus profit is considered. Prices are
available due to change in the manufacturing cost, discount will be offered to institutions or
persons buying in cash and bulk to motivate them to buy in cash. The after sales service policy
is guarantee not warrant competitors selling price are different because of different material
provisioning and manufacturing costs
PRICE LIST
EGUIPMENT STANDARD
KSHS 120 PER M
CABINET KSHS 10,000
QUILLOTINE KSHS 45,000
HSHS 25,000

3.5.1 ADVERTISING AND PROMOTION STRATEGY

3.5.2 ADVERTISING
Advertising strategy is to inform customers of the new business enterprise and the equipment
sold considering the targeted persons or team. Advertising method will be a sign board and the
name of the business in the premise as well as radio stations
Total cost of advertising is kshs 20,000 and the frequency in the radio is twice in a day
effectiveness of advertising is measured by the sales outcome and the new customers strikers
with concise inform can be stacked in wall with a sign like ‘QUALITY ELECTRICAL
MATERIALS IS STANDARD’ handbills will also be given to frequent customers articulating
on the equipment offered

3.5.3 PROMOTION
Promotion methods are discount, after sales service and gifts discount will be given to
customers buying in bulk after sales service is guaranteed in the business and gifts like calendars
given to customers the business will use ksh 60,000in a year for promotion

3.6 SALES TACTICS

This will target towards attracting more customers and maintaining existing ones. The business
will use direct selling technique and recruit, select, retain sales fire with higher education level
trained and those with experience in the same field. The staff is motivated by being given
presents and promotions of job group, meals, transport and aprons bearing the business name and
logo are given to them

3.7 DISTRIBUTION STRATEGY

Some customers who like collecting their equipment from the premise can do it and other
business that need transport services can be cited to deliver. The business vehicle will be used for
transport services. The cost of distribution in a month is approximately kshs 25,000 since it is
fuel cost and vehicle serving. Anticipated problems are poor means of transport and poor
handling equipment. The proprietor will solve the anticipated problems by purchasing required
handling equipment and hiring of a better means of transport
Future plans are buying a lorry to transport more equipment at the same time having another
driver.
 CHAPTER FOUR

4.1 ORGANIZATIONAL AND MANAGEMENT

The human resource for the business will play a very important role in ensuring that the business
objective is successful the proprietor will be guided in the handling of staff through objectives
set which will include the following
• To recruit well trained and experienced staff as a requirement for anticipated performance
in the business
• To ensure that all staff understand his duties and responsibilities so as to promote service
and delivery to customers

4.2 ORGANAZATIONAL STRUCTURE

The following is the proposed organizational structure of the business at the start and after two
years in operation
KIABI MODERN BOOKSHOPORGANIZATION CHART
GENERAL MANAGER

CASHIER SHOP ASSIST.

WATCHMAN CLEANER RIDER

4.3 KEY MANAGEMENT PERSONNEL

The proprietor will be the manager of the business
MANAGER
QUALIFICATION
• He is a form four level of education
• He is finalizing his diploma in Electrical engineering
• Hardworking and goal oriented
• Has entrepreneurial field experience
DUTIES AND RESPONSIBILITIES
• Will be responsible for business organizations as whole
• Will determine business mission and goals
• The manager will recruit and motivate staff
• Will employ and fire staff
• Will raise finance to be used in the firm or business
OTHER PERSONNEL
SALESMAN
QUALIFICATIONS
• Must possess a form four certificate
• Must have a know how of electrical items
• Must have a good mental, physical and moral quality
DUTIES AND RESPONSIBILITIES
• Will be responsible for the sales made by the business
• Will be marketing and promoting the business products
• Will be cleaning the equipment and the premise
CASHIER
QUALIFICATION
Must poses a form four certificate
Must have a knowledge of accounting
Have at least one year experience in the same field
DUTIES AND RESPONSIBILITIES
• Will be receiving money of the business

4.4 RECRUITMENT, TRAINING AND PROMOTION

4.4.1 RECRUITMENT
The proposed business will recruit the required employees by identifying positions to be filled
The sources of recruitment will be from friend’s employment bureaus
RECRUITMENT PROCESS
• Identify the business source
• Advertise the job
• Application are received
• Short listing candidates for interviews
• Interviewing of the candidates
• Short listing qualified candidates
• Probation period
• Confirmation

4.4.2 TRAINING
The proposed business will not engage in training. All recruited staff will be trained and
experienced ready to work for the business

4.4.3 PROMOTION
The promotion of persons will be a motivation to staff when promoting staff the following
should be considered
• Promotion
• Upon acquisition of additional professional qualification
• Event of a vacant position created

4.5 RENUMERATION
Remuneration is the reward given to personnel for the good work done. The business will be
given salaries to its staff as remuneration and allowance as well as mandatory deduction as a way
of motivating them
ALLOWANCES
• Transport allowances
MANDATORY DEDUCTIONS
• Insurance fee
REMUNERATION TABLE

POST BASIC PAY ALLOWANCESS DEDUCTIONS GROSS PAY

MANAGER 14,000 2,000 1,000 15,000
SALESMAN 7,000 900 400 7,500
CASHIER 10,000 1,000 500 10,500
TOTALS 31,000 3,900 1,900 33,000

4.6 LEGAL REQUIREMENT

The business will incur the following legal requirements when starting its operation
LEGAL REQUIREMENTS COST OBTAINED AT
Trading license 31,200 County council
Operation license 21,800 ministry
Totals 6,000

4.7 SUPPORT SERVICES

Other support services that the business will require include
• Banking services from
Kenya commercial bank (KCB) - eldoret branch
Po box 225-30700
eldoret
Tel: 053-255014
• Legal services from
Mbogoa and company advocates
Po box 4408-30100
eldoret
Tel: 020-880074
• Insurance services from
Greenshield insurance company – webuye branch
Po box 723-30700
eldoret
Tel: 023 – 340192
 CHAPTER FIVE

5.1 PRODUCTION AND OPERATION PLAN

The proposed business will lay down comprehensive strategies concerning the production of
items as well as delivery of services to esteemed customers. The products and services will be
unique and of high quality the proprietor will be both creative and innovative when producing or
giving a service. The production and operation objectives to quid the business in its production
which include
• To acquire all the basic facilities and equipment necessary for the provision of quality
service and products to customers
• To utilize creativity and innovation in the design of products and provision of services on
a continuous basis in order to be the customers first choice always

5.2 OPERATIONAL FACILITIES AND EQUIPMENT

5.2.1 FACILITIES
In order for the business to carry out its services it should have facilities, the premises will
require fire rooms each room costing 1,000 per month

5.2.2 EQUIPMENT
Equipment required by the business for it to do its delivery of services includes
Equipment No. required Capacity Unit cost Total cost Source
Tables 1 - @1,000 1,000 Fair deal
Chairs 3 - @500 1,500 Fair deal
Counter 4 - @1000 4,000 Fair deal
Shelve - - 500 Fair deal
Computer 1 - @2,500 2,500 Ukwala supermarket
Miscellaneou - - 2,000
s
TOTAL 11,000
5.3.0 PRODUCTION AND OPERATIONAL

STRATEGY 5.3.1PRODUCTION / SERVICE DESIGN

Office equipment offered will be a good and required design which will attract other customers.
The good design will give a good firms impression hence increasing the sales of stand and office
equipment dealers

5.3.2 PRODUCT / SERVICE DEVELOPMENT

The proposed business will acquire the equipment from a permanent supplier who offers good
quality equipment at an affordable price , selected supplier will carry out through research and
flexible with technological changes.

5.3.3 MONTHLY MATERIALS REQUIREMENTS

The table below shows the monthly material requirements
Materials quality Unit cost Total cost Sourcre
Cables Assorted - 40000 East Afric
Trunks Assorted - 20000 Cables.
Conduits Assorted - 15000 East Africa
Sockets 10000 East Africa
Miscellaneous - - 10000 East Africa
-
TOTALS 95000

5.3.4MONTHLY LABOUR REQUIREMENTS

The manager should have managerial holder and entreprenueral skills
The salesman should posess a certificate in sales and marketing with marketing and forecasting
skills
Total labor cost will be kshs 33,000

5.3.5 MONTHLY PRODUCTION / OPERATION COST

Labor cost + cost of materials = production cost
MONTHLY PRODUCTION OVERHEADS WILL BE PRESENTED AS FOLLOWS
OVERHEADS AMOUNT (KSHs)
Electricity 1000
Water 500
Postage 500
Transport 2000
Miscellaneous 1000
Totals 5000

5.4 PRODUCTION / OPERATION SERVICES

INQUIRY OF RAW MATERIALS

TENDERING
QUATATION
NEGOTIATION
PLACING OF ORDERS
DELIVERY OF ORDERS
DELLIVERY OF QUALIFIED
SUPPLIER DISTRIBUTION
The business will ensure that quality is maintained in the delivery of services by recruiting well
trained and experienced staff that is motivated provision of good quality equipment which is well
maintained and conducive working environment

5.5 REQULATIONS AFFECTING OPERATIONS / PRODUCTION

The government has rules and regulations governing any business therefore it should meet the
necessary requirements before it commence its business operations

5.5.1 Trademarks patents and copyrights

The firm intends to make legal actions against copy righting of its trademarks or patents i.e.
imitation of its equipment by other firms any copyright imitations will be subjected to legal
actions.
Safety requirements
Employees are subject to injuries when handling equipment therefore they should be insured and
provided with safety materials like gloves and apron
Approaches and compliance
To ensure fairness between employer and employees relationship there are special acts that
should be observed that is the employment act
 CHAPTER SIX

6.1 FINANCIAL PLAN

The financial plan for the proposed business will show the required financing circulation of
finances and the expected income. The key objective to quid the financial management will
include
To ensure that finances are handled by the right staff in term of qualifications, experience so as
to reduce cases of financial mismanagement
To keep accurate and up to date records of all financial transactions with an aim of making it
easy to detect anomalies
To seek professional advise wherever necessary before making substantial investments so as to
reduce risks of sailors

6.2 PRE – OPERATION EXPENSES

Before I commence operation will be necessary in terms of acquisition of basis facilities and
services. This will have a successful start leading to ultimate achievements of set goals
The anticipated pre –operational costs will be estimated as below
ITEM COSTS (KSHS)
• Business registration 2500
• Post office box rental 2500
• Telephone / mobile phone connections 2000
• License and permits 4000
• Electricity meter / account 2000
• Water meter account 2000
• Advertising / promotion 3000
• Equipment 160000
• Furniture and fittings 15000
• Rent 4000
• Miscellaneous 3000
Total 200000
6.3 WORKING CAPITAL FOR ELDORET STANDARD ELECTRICAL SUPPLIER
FOR THE FIRST THREE YEARS (2021, 2022 AND 2023)
2015 2016 2017
CURRENT ASSETS
Cash in hand 99250 170150 241350
Cash at bank 300000 400000 500000
Debtors 4000 3000 4000
TOTAL CURRENT ASSETS 403250 573150 795350
CURRENT LIABILITIES
Creditors 7000 25000 36000
Bank loan (interest) 13750 15000 2500
TOTAL CURRENT LIABILITIES 20750 40000 38500
Working capital (CA - CL) 382500 533150 756850
6.4 LOAN REPAYMENT SCHEDULE
The proposed business will acquire loan from Kenya commercial bank ltd p.o box 225-307000
eldoret to enable it start off. The bank loan will be kshs 130000 payable over a period of one year
that is 12 months at an interest rate of 12% per annum
MONTH AMOUNT INSTALMENTS INTEREST BALANCE (KSHS)
(KSHS) PAID
1 150000 12500 1500 137500
2 137500 12500 1375 12500
3 125000 12500 1250 112500
4 112000 12500 1125 1000000
5 100000 12500 1000 87500
6 87500 12500 875 75000
7 75000 12500 750 62500
8 62500 12500 625 50000
9 50000 12500 500 37500
10 37500 12500 375 25000
11 25000 12500 250 12500
12 12500 12500 125 0
 PROJECTED CASH FLOW ELDORET STANDARD ELECTRICAL SUPPLIER ROR THE YEAR 2021
PARTICULERS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC
Cash inflow
Beginning cash 300000 171500 132150 102500 101650 128600 158750 192300 229950 270300 313850 346300
Sales 120000 150000 160000 190000 220000 225000 230000 232000 235000 235000 238000 240000
Debtors 4934850
Total cash inflow 420000 321500 292150 292150 321600 353600 388750 424300 464950 509300 551850 594300
Cash outflow 1847000
Pre-operational 60000
expenses
Purchase s 150000 150000 150000 152000 154000 155000 155000 155000 156000 156000 158000 156000
Salaries 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 225000
Rent 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
License 4000
Electricity 1500 1500 1500 1500 1500 1500 1600 1600 1500 1500 1600 1600
Water 500 500 500 500 500 500 500 500 600 600 600 600
Telephone 1000 1200 1000 1500 1200 1500 1500 1400 1200 1200 1500 1200
Promotion 1000 1000 1500 1000 1000 3000
Insurance 500 500 500 500 500 500 500 500 500 500 500 500
Creditors 3000 4000
Loan payment 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100
Interest on loan 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250
Transport 2000 2000 2000 2000 2500 2500 2000 1500 2000 2000 2000 2000
Stationary 500 500 300 500 500 300 300 300 300 300 300 300
Miscellaneous 3000 2000 2000 1500 1500 1200 1200 1200 1200 1500 1700 2000
Maintenance 800 1500
TOTAL CASH 248500 189650 189650 190850 193050 194850 196450 194350 195650 195450 205550 195030
OUTFLOWS
NET CASH 171500 132150 102500 101650 128600 158760 192300 229950 270300 313850 344300 399250

27
PROJECTED CASH FLOW FOR ELDORET STANDARD ELECTRICAL SUPPLIER OFFICE ROR THE YEAR 2022
PARTICULERS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC
Cash inflow
Beginning cash 399250 435700 475950 501900 517050 527200 529850 544000 546150 548300 549350 556000
Sales 238600 238000 239000 240000 238000 238000 240000 240000 242000 241700 244000 245000
Debtors 300
Total cash inflow 637250 673700 714950 741900 755050 765200 769850 786000 788150 790000 796350 801000
Cash outflow
Pre-operational expenses
Purchase 156000 156000 170000 170000 170000 175600 175600 175000 176000 176000 176000 176000
Salaries 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000
Rent 3000 3000 3000 3000 3000 3000 5000 5000 5000 5000 5000 5000
License 4000
Electricity 1600 1600 1600 2000 2000 2000 2000 2000 2000 2000 2000 2000
Water 600 600 600 1000 1000 1000 600 1000 1000 1000 1000 1000
Telephone 1200 1000 1500 2000 2000 2000 2500 2500 3000 3000 3000 3000
Promotion 1000 1000 1200 1200 1400
Insurance 500 500 500 500 500 500 500 500 500 500 500 500
Creditors 1000 15000
Loan payment 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100
Interest on loan 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250
Maintenance 12000 14000
Transport 2000 1500 2000 2500 3000 3000 3000 3000 2500 3000 3000 3000
Stationary 300 200 500 500 500 500 500 500 500 500 500 500
Postage 500 500 500 1000 1000 1000 1000 1000 1000 1000 1000 1000
Miscellaneous 1500 1500 1500 2000 2500 5000 5000 5000 4000 4000 4000 4000
Total cash outflow 201550 197750 213050 224850 227850 235350 225850 237850 239850 240350 240350 230850
NET CASH 435700 475950 501900 517450 527200 529850 564000 546150 548300 549650 556000 570150
PROJECTED CASH FLOW FOR ELDORET STANDARD ELECTRICAL SUPPLIER ROR THE YEAR 2023
PARTICULERS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALS
Cash inflow
Beginning cash 570150 585100 608050 626250 643650 663050 682750 702350 700550 721250 743950 769350 8016450
Sales 240000 242000 242000 245000 246000 246000 246000 246000 248000 250000 254000 260000 2968000
Debtors 4000 4000
Total cash inflow 810150 850050 871250 888650 909050 928750 952350 948550 971250 101950 100988450
Cash outflow
Pre-operational
expenses
Purchase 175000 176000 178000 178000 178000 8000 18000 180000 180000 182000 185000 2147000
Salaries 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 300000
Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
License 4000 4000
Electricity 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 26400
Water 1000 2200 1000 1000 1000 1000 1100 1100 1100 1100 1100 1100 12600
Insurance 500 500 500 500 500 500 500 500 500 500 500 500 6000
Telephone 2000 500 2500 2000 2000 2500 3000 3000 2500 3000 3200 3500 32400
Promotion 2200 5000 5000 4000 14000
Creditors 8000 24000 4000 36000
Loan payment 4100 4100
Interest on loan 1250 1600 2850
Maintenance 1250 6000 1000 8250
Transport 2500 2000 2500 2500 2500 2500 3000 3000 3000 3000 3000 3000 32500
Stationary 500 500 500 600 400 500 500 800 1000 500 400 500 6700
Postage 1000 800 800 800 1000 900 900 1000 800 800 1000 1000 10800
Miscellaneous 1000 2000 2000 2000 2000 3200 5000 6000 5000 6000 5000 6000 46000
Total cash outflow 225050 219050 223800 227600 225600 226300 226400 251800 227300 227300 232600 238000 3750800
NET CASH 585150 608050 626250 643650 663650 682750 702550 702550 700550 721250 743950 791350 8237650
6.5 PROFORMA INCOME STATEMENT FOR ELDORET STANDARD ELECTRICAL
SUPPLIER FOR THE YEAR 2021, 2022 AND 2023
PARTICULERS 2021 2022 2023
Sales 2483000 2883700 2968000
Less: purchases 1867000 2051000 2147000
Cross profit 636000 832700 821000
Expenses
Salaries and wages 270000 300000 300000
Rent 36000 48000 6000
License 4000 4000 4000
Electricity 18400 22800 27600
Water 6600 10800 12600
Telephone 15600 26700 6000
Promotion 7500 40000 32400
Insurance 6000 6000 14000
Creditors 7000 25000 360000
Loan payment 45100 49200 5700
Interest on loan 13750 15000 2500
Maintenance 2300 26000 7000
Transport 24000 31500 32500
Stationary 4700 10000 6700
Postage 10500 10800
Miscellaneous 20000 40000 46000
480750 665500 603800
Net profit before tax 155250 167200 217200
Less 15% tax 23287.50 25080 32580

Net profit after tax 131962.50 142120 184620

30
6.6 PROFORMA BALANCE SHEET FOR ELDORET STANDARD
ELECTRICAL SUPPIER FOR THE YEAR ENDING DECEMBER
ASSETS 2021 2022 2023

FIXED ASSETS
Machinery and equipment 45000 39500 35550
Furniture &fittings 15000 13500 12150
Total fixed assets 60000 53000 47700

CURRENT ASSETS
Cash in hand 99250 170150 241350
Cash at bank 300000 400000 550000
Stock
debtors 4000 3000 4000
Total current asset 403250 573150 795350

CURRENT LIABILITIES
Creditors 7000 25000 36000
Total current assets 700 25000 36000

LONG TERM LIABILITIES

Bank loan 45100 49250 5700
Equity 279187.50 409830 616730
Net profit 131962.50 142120 184620
Total liabilities 456250.00 601100 807050
BREAK EVEN POINT FOR STANDARD OFFICE EQUIPMENT FOR THE YEAR
PARTICULERS 2021 2022 2023

Fixed costs
Rent 30000 48000 60000
Interest on loan 13750
Salaries 270000 300000 300000
License 41000 4000 4000
Insurance 6000 6000 6000
329750 358000 370000
Variable cost
Electricity 18400 22800 27600
Water 4400 10800 12600
Telephone 15600 26700 32400
Advertising 7500 40000 16000
Postage 10500 10500
Maintenance 2300 26000 7000
Purchases 1867000 2057000 2147000
Miscellaneous 20000 40000 46000
TOTALS 1917200 2227800 2297400

PARTICULERS 2021 2022 2023

Break even = 329750 358000 370000
fixed cost – 1-(1917200/2483000) 1-(227800/2883700) 1-(2297600/2968000)
variable cost
= 329750 = 358000 = 370000
1-(0.2279) 1-(0.77255) 1-(0.77406)

= 1466906.50 = 358000/0.22745 = 370000

0.22594
= 1573972.30
= 1637602.90
6.7 PROFITABILITY RATIOS FOR YEAR
Ratio type Working format 2021 2022 2023

Gross profit Gross profit / sales 636000/2683000 832700/2883700 821000/2960000

ratio x 100 x 100 x 100 x 100

= 25.61% = 28.88% = 27.66%

Return on Net profit / owners 155250/2791875 167200/409830 x 167200 / 409030

equity equity x100 x 100 100 x 100

= 55.61% = 39.82% = 35.22%

Return on Net profit / capital 131962.50/ 162.12/399250 104620 / 570150

investment x total investment 300000 x 100 x 100 x 100
x 100
= 43.99% = 35.6% = 32.25%

6.8 DESIRED FINANCING

The desired financing for the proposed business will be as to the table below (at the beginning of
the year)

ITEM AMOUNT
Operational costs 200000
Working capital 100000
TOTAL 300000
6.9 PROPOSED CAPITALIZATION
The proposed capitalization for the proposed business will be as follows or indicated below
ITEM AMOUNT
Owners contribution 100,000
Borrowing from relatives & friends 100,000
Bank loan 100,000
TOTAL 300,000