i

DOCUMENT: BUSINESS PLAN

COURSE CODE: 1601

PRESENTER: SAMUEL NDEHI CHEGE

REGISTRATION NUMER: KTVC/021/2018

COLLEGE: KIPIPIRI TECHNICAL AND VOCATIONAL

COLLEGE

PRESENTED TO: KENYA NATIONAL EXAMINATION

COUNCIL

IN PARTIAL FULFILMENT FOR THE AWARD OF CERTIFICATE IN

ELECTRICAL AND ELECTRONICS ENGINEERING

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DEDICATION
I dedicate this project to my parents MR AND MRS CHEGE for their continued support
throughout my course.
Also to my supervisor MR KARARA and friends for your encouragement and support
You are all wonderful people.

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Acknowledgement
First I would like to thank the almighty God for seeing me out through my education and to my
parents and supervisor also to my course mates and friends.

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Declaration
I
Students name: SAMUEL NDEHI
Signature…………………………………….
Date…………………………………………..
Declare that this project is my original work and it have never been submitted to Kenya national
examination council or any other examination body before.

This project have been submitted for the award of certificate with my approval as the supervisor.
Supervisor’s name: MR KARARA
Signature…………………………………………………..
Date………………………………………………………………

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 TABLE OF CONTENTS

Content Page number

DECLARATION..................................................................................................................................ii
ACKNOWLEDGEMENT.....................................................................................................................iii
TABLE OF CONTENTS.......................................................................................................................iv
CHAPTER ONE..................................................................................................................................1
1.0 BUSINESS DESCRIPTION.........................................................................................................1
1.1THE SPONSOR.........................................................................................................................1
1.2.0 BUSINESS NAME.............................................................................................................2
1.2.1 BUSINESS LOCATION AND ADDRESS..............................................................................3
1.2.3 JUSTIFICATION OF OPPORTUNITY..................................................................................4
1.3.0 THE INDUSTRY................................................................................................................4
1.4 FORM OF OWNERSHIP...........................................................................................................5
1.5 TYPE OF BUSINESS.................................................................................................................5
1.6 THE PRODUCT AND SERVICES................................................................................................6
1.7 GOALS OF THE BUSINESS.......................................................................................................6
1.7.1 LONG TERM GOALS.........................................................................................................6
1.7.2SHORT TERM GOALS........................................................................................................7
CHAPTER TWO.................................................................................................................................8
2.1 MARKETING PLAN..................................................................................................................8
2.1.1 CUSTOMERS....................................................................................................................8
2.1.2 ORGANIZATIONAL AND MANAGEMENT PLAN...............................................................8
2.1.3 PRODUCTION AND OPERATIONAL PLAN........................................................................9
2.1.4 FINANCIAL PLAN.............................................................................................................9
2.1.5 MARKET SHARE...............................................................................................................9
2.1.6 AMOUNT OF UNITS SOLD AND SALES AVAILABILITY....................................................10

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 2.2 COMPETITION......................................................................................................................11
2.2.1 EFFECTS OF THE COMPETITORS ON THE BUSINESS.....................................................11
2.2.2 GEOGRAPHICAL LOCATION OF COMPETITORS.............................................................11
2.2.3 HOW TO OVERCOME THE COMPETITORS....................................................................11
2.3 PRICING STRATEGY..............................................................................................................12
2.4 SALES TACTICS.....................................................................................................................13
2.4.1 DISTRIBUTION STRATEGIES...........................................................................................13
2.5 METHODS OF PROMOTION AND ADVERTISING..................................................................13
2.5.1 PROMOTION.................................................................................................................13
2.6 ADVERTISEMENT AND PROMOTION...................................................................................14
2.6.1 FACTORS TO CONSIDER DURING PRICING....................................................................14
2.6.2 SALES TACTICS..............................................................................................................15
2.6.3DISTRIBUTION STRATEGIES...........................................................................................15
CHAPTER THREE.............................................................................................................................16
3.0 ORGANIZATION/ MANAGEMENT PLAN...................................................................................16
3.1 SMART FARMER ORGANIZATION STRUCTURE....................................................................16
3.2 KEY MANAGEMENT PERSONNEL /BUSINESS MANAGERS...................................................16
3.3 OTHER PERSONNEL DUTIES AND RESPONSIBILITIES...........................................................17
3.4 RECRUITMENT, TRAINING AND PROMOTION.....................................................................19
3.4.1 RECRUITMENT..............................................................................................................19
3.4.2 TRAINING......................................................................................................................19
3.4.3 PROMOTION METHOD.................................................................................................19
3.5 REMUNERATION AND INCENTIVES......................................................................................20
3.5.1 REMUNERATION GUIDELINES......................................................................................20
3.5.2 INCENTIVES...................................................................................................................20
3.6 LICENSE AND PERMITS AND BY LAWS.................................................................................21
3.7 OTHER SUPPORT SERVICES..................................................................................................22
CHAPTER FOUR..............................................................................................................................23
4.0 OPERATIONAL / PRODUCTION PLAN.......................................................................................23

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 4.1 PRODUCTION FACILITIES AND CAPACITY............................................................................23
4.2.1 FACILITIES AND CAPACITIES..........................................................................................23
4.2.2 FEATURES OF WORKSHOP LAYOUT –GROUND PLAN..................................................24
4.3 PRODUCTION STRATEGY......................................................................................................25
4.3.1 THE COST OF LABOUR...................................................................................................25
4.3.2 RAW MATERIAL COST...................................................................................................26
4.2.3 PRODUCTION OVERHEAD COST PER MONTH..............................................................27
4.2.4 SUMMARY OF TOTAL MONTHLY PRODUCTION COST..................................................27
4.3 PRODUCTION PROCESS........................................................................................................27
4.4 REGULATION AFFECTING OPERATION.................................................................................28
CHAPTER FIVE................................................................................................................................30
5.0 FINANCIAL PLAN......................................................................................................................30
5.1 PRE-OPERATIONAL COSTS...................................................................................................30
5.2 SMART FARMER AGRO VET WORKING CAPITAL.................................................................30
5.2.2 SMART FARMER AGRO VET..........................................................................................33
5.5 PRO –FORMA BALANCE SHEET............................................................................................33
5.6 BREAK EVEN LEVEL...............................................................................................................34
5.7 PROFITABILITY RATIOS.........................................................................................................35
5.8 DESIRED FINANCING............................................................................................................35
5.9 PROPOSED CAPITALIZATION................................................................................................36
APPENDICES...................................................................................................................................36
EXECUTIVE SUMMARY...............................................................................................................36

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 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
The entrepreneurs has been running agro vet business as a career. This has enabled the
entrepreneur to gain extensive knowledge skills in the business. The business will be a sole
proprietorship, which will sell farm products, animal feed and veterinary services such as animal
drugs and artificial insemination.
Expansion
By the end of one year the business will grow and enlarge and this will be sustained on its
advancement.
Income generation
By the end of the 2 nd year, the business aim to earn more income which can be used to pay
more salaries to the employees.
Popularity
By the end of 2nd year the business aims to capture and maintain 15% of the market share and
this business name will be known.

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1.2.0 BUSINESS NAME
The name of the proposed business will be LEMMI AGROVET ENTERPRISE. It is easy to read and
remember. The business name will be registered as LEMMI AGROVET ENTERPRISE after making
a lot inquiries from the registrar of the business. This will ensure no other business portrays the
same name as identified by business owner. The business owner will acquire a certificate of
registration from the

LEMMI AGROVET ENTERPRISEis a business owned under sole proprietorship. The business
will sell farm products and services such as agrochemical, animal feeds and seed crops. It will
also provide veterinary services such as deworming, dip washing and vaccination of livestock.
The business will be financed by the owner and friend`s contribution which after sale will use the
profit and pay the debt and to in the business in greater energy by having similar services in other
potential areas.
It`s main objective is to ensure effective supply and availability of animal products and services
to its customers.

1.2.1 BUSINESS LOCATION AND ADDRESS

The business will be located within Nyahururu town in Nyandarua county. It will be situated on
Heshima building ground floor door number three next to Equity Bank. The business will be
directly on your way to Nairobi.
The business address will be:
SMART FARMERAGROVET
P.O. BOX 123, Nyahururu.
Mobile 0716234357

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1.2.3 JUSTIFICATION OF OPPORTUNITY
Few competitors
The number of competitors is one of the factors that favor my choice of business that is agro vet
business. Nyahururu town so far has few agro vets. The currently working are in the town center
and none is close to the farming area.
Location from farmers homes
There is need to cut cost in every investment. Farmers are not willing to make purchase from
agrovets and later pay much to transport them to their homes. The agrovet will be situated
outside the town and close to the farmers.
Self employment
Due to high population which leads to unemployment in the country, the business will create self
employment and will enable to earn a living to sustain my life for other people in the area. I will
also be able to employ others facilitating the governments agenda in job creation.
Population
Being an urban area, there is higher population. Specifically, there are about five learning
institutions with two colleges. This has made the need for milk on the rise hence increasing the
number of daily farmers in the area.
Infrastructure
The availability of roads, electricity will enable the business to transport the products without
any problem. A Tuktuk (motor tri cycle) will be used to reach the customers easily.

1.3.0 THE INDUSTRY

The business is under Agriculture and specifically animal production. This industry has been in
existence for long, but the commercial aspect is a bit new. This industry satisfies the demand for

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products from animals and also animals consumables. During the staring phase, three Employees
will be assigned various responsibilities. However, this will be dynamically affected by the
industry development. Basic capital requirement are approximately Ksh 1000,000 which is the
amount to be invested for the business. It will make the requirements of the business operation
successfully. With the increase with the number of residential homes in the area, high demand
for animal products are expected to be on the rise hence better care for the animals.
Basic computers will be an applicable technology for the starting phase. Developments will be
added to make a system to track sales and stock. However, the industry is expected to have a
blow on seasonality as some areas are affected by drought conditions lowering production and
the farmers interest in the investment.
Most of the business sales will be high during rainy seasons this is because this season is when
most farmers will be planting and also the crops will need preventive products.

1.4 FORM OF OWNERSHIP

The business will be sole proprietorship. Many factors and reasons are considered in preference
of the business and not any other form of ownership.The business is easy to form and dissolve
it does not require many people to start and maintain other than the owner himself. There is
freedom in decision making and implementation of policies, strategies of how the business is
supposed to be run and the activities involved. The business owner enjoys all the benefits that
is obtained from the business. He is also accountable for the losses made.
It fosters creativity and innovation enabling the proprietor to exploit his talents, abilities
without limitation. He is the one to see how well he can venture and get market for the
business sustainability.

Financial sources Amount (Kshs.) Percentage (%)

Personal savings 720,000 72
Friends and family contribution 200,000 20
Loan from Bank 180,000 18
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 Total 1,000,000 100

1.5 TYPE OF BUSINESS

The business will be a trade and service enterprise. This is for reasons that It deals with selling
animal feeds, agrochemical, seed crops and offer veterinary services. It`s target customers will
be dairy farmers, poultry farmers and the general public. The business will ensure positive
image is fostered throughout by providing good interpersonal relationship and quality products
to its customers and competitors. We will be Providing agricultural knowledge, skills and
pamphlets on its product and services to individual groups and members. Discounts will also be
on some of its products that are on offer from particular manufacturers.

1.6 THE PRODUCT AND SERVICES

LEMMI AGROVET ENTERPRISE will sell animal feeds, agrochemical, seed crops and will also sell
farm inputs like pangas, mowers, slashers. The business will also offer veterinary services.
The business is also going to connect its customers with the manufacturers of farm machinery
tools like tractors, grain dryer, farm trucks, wheat harvesters, irrigation machines and many
more at an affordable price.
The products will be of high quality and charged at a reasonable price. The business will provide
preventive products and help cub the diseases and crop infection. Products such as milk salve.
Most of the business products will be as per customers’ needs and the trend in the market. We
will ensure we sell durable suitable and economically friendly products.
The goods we will sell will be mostly bought from the direct manufactures of the products so as
to avoid buying fake products.

1.7 GOALS OF THE BUSINESS

The business is striving towards becoming the most successful agro-dealer in the region. it will
provide quality products services and will base its products on all agricultural spheres.

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1.7.1 LONG TERM GOALS
Expansion
By the end of one year the business will grow and enlarge and this will be sustained on its
advancement.
Income generation
By the end of the 2 nd year, the business aim to earn more income which can be used to pay
more salaries to the employees thus increasing standards of living
Popularity
By the end of 2nd year the business aims to capture and maintain 15% of the market share and
this business name will be known.

Salary increment
By the end of 3rd year the business aims to increase employees’ salary and this will be a great
favors to the employees.

1.7.2SHORT TERM GOALS

Improve customer relationship
By the end of the five months, the business aims at improving and main customer`s
relationship.
the businesses will create more jobs opportunities by increase of 18%.

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 CHAPTER TWO

2.1 MARKETING PLAN

The business environment will provide ready market and favorable market share due to high
population of potential customers such as individual, institution, commercial customers and
competitors. Promotion and advertisement of the farm products will be done through media,
exhibitions and educational literature. The business will operate in discounting, market pricing
with a zero channel distribution method and over counting purchasing.

2.1.1 CUSTOMERS
The environment where the business will be located has different classes of people who
contribute positively to the development and growth of the business. They include:
Individual customers
These are small scale farmers and the general public, who are destined to buy agro farm products
who have high purchasing powers act like occasional customers who will enjoy economic of
scale, this will allow them to make a profit .Their mode of payment will be mostly cash.
Institutional customers
These are school such as Ahiti institute of agriculture. The customers will not be direct
customers but there will be dependence. It will also be adjacent to Umoja dairy where farmers
can make their orders and purchase as they make their deliveries. The business will have
business personnel and agents within the institutions.
Commercial customers
These are customers who will purchase the products and later resell in their businesses. These are
customers who have a high purchasing ability to buy in bulk.

2.1.2 ORGANIZATIONAL AND MANAGEMENT PLAN

The business will be owned and managed by single general manager with the help of other
personnel such as accountant, sales clerk, production assistance manager and veterinary doctor.
The management will ensure licensing of the business, remuneration of its employees will be
done according to employees qualifications and working experience.

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2.1.3 PRODUCTION AND OPERATIONAL PLAN
The business will commence its daily operation from 7:30 a.m-6:30 p.m. Modern technology
machinery will be used to ensure efficiency in production.
The business will incur monthly expenses for production such as labour cost, raw materials cost
and production on finished goods and distribution.
Rules and regulation that bind the business will be catered for to ensure maximization of sales
cost of production. Every employee will have a specific specialization. However, general skills
and knowledge will be taught to ensure that an absent employee does not paralyze the operations
of the firm.

2.1.4 FINANCIAL PLAN

Cash required starting and progress the business is approximately Kshs 1,000,000.This will be
used to purchase machinery products and equipment, fixed assests, production cost and purchase
raw materials. This includes pre-operational and registration of the business, the business will be
financed by:
Bank loan from equity bank Sh 100,000/=
Personal savings Sh 720,000/=
Family and friends contribution Sh 180,000 /=
In return of the financial gross profit this will be 60% of services offered to customers and goods
return on investment.

2.1.5 MARKET SHARE

The business location is in densely populated area surrounded by offices, bank, schools and
residential homes. The population is approximated to be 100,000 people with potential
customers.
Approximately20,000 people are SMART FARMER AGROVET customers with the 17,000
units to its competitors.

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2.1.6 AMOUNT OF UNITS SOLD AND SALES AVAILABILITY
With the approximated population of people, the amount of units sold will be 30,000 units which
amount to 3600 units a month. This can be illustrated as

SMART FARMER AGROVET

23,000 X 100% =76.6% (360 degrees) = 190 degrees
30,000
.The competitors will share the following part of the potential customers as follows;

5000 customers for uzuri agro vet

5,000 x 100%
30,000
= 16.7 % (360 degrees) = 120 degrees
2,000 customers for ANIMAL FEEDS AND POULTRY LAYERS
2,000 x 100%
30,000 = 6.67% (360 degrees) = 48 degrees

2.2 COMPETITION
The agro vet is based in agricultural industry whose growth is intensive. Therefore many agro
vets are emerging on daily basis due to demand of the farm products.

POTENTIAL COMPETITORS
The business has the following competitors
uzuri agrovet stores
animal feeds and poultry layers B
Size of the competitors
They are small in size .
They lack customer satisfaction.

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2.2.1 EFFECTS OF THE COMPETITORS ON THE BUSINESS
All are located within the town centre.
Changes in price of product as per the business.

2.2.2 GEOGRAPHICAL LOCATION OF COMPETITORS

UZURI AGROVET STORES is located not far from the business premises and has good return
of customers but poor equipment.

2.2.3 HOW TO OVERCOME THE COMPETITORS

Use of modern technology such as refrigerators for storage of vaccines.
Ensure effective products advertisement and fair pricing with quality products and services.

2.3 PRICING STRATEGY

The business will have fluctuating characteristics due to the following factors.
 Economic Nature
 Current planting, weeding harvesting seasons
 Quality of the products
 Increase decrease on the market demand.
The business has opted the use of the following pricing methods.
Psychological pricing
Is a method of charging price of goods and services rendered depending on the profits loss
realized by the business. Pricing is based on psychological significance of customers.
PRICES OF SOME OF ITS PRODUCTS AND SERVICES
PRICE LIST
PRODUCT/SERVICES QUANTITY PRICE (SHS)
Maize seed 1kg 400
Fungicide 5 tables 100
Herbicide 5 tablet 50
Dairy meal 1 kg 25
Maize germ 1kg 550

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Mineral salt 1 kg 100
Deworming 50 ml 80
Vaccination 1Ml 100

Discounting prices
Mainly to potential customers who buy in bulk
Prestige pricing
Will be administered to farmers who prefer high based breed seeds and veterinary pricing of
hybrid cows.
Market pricing
Pricing according to prevailing in the market
Cost –plus pricing
Pricing according to production cost incurred.

2.4 SALES TACTICS.

The business will use the following selling tactics
 Direct selling to both potential and regular customers
 Discounting of products
 Credit services especially to potential customers
 Impromptu services during low sales and reduce overstocking
 Use of agents and promoters by staff quarters
The business will utilize distributors and agents.

2.4.1 DISTRIBUTION STRATEGIES

The business will major in zero –level channel of distribution (producer-consumer selling). This
method involves direct selling which is less expensive and simple to operate. Over-counter
purchasing, where customers buy over the counter bargain and pay for the products and services
offered at the cashier desk. The firm will offer bulk goods transportation to farmers’ premises.

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2.5 METHODS OF PROMOTION AND ADVERTISING

2.5.1 PROMOTION
Used to encourage sales of commodity in a targeted marketed mix. Commonly used during
introduction of a new product in the market. It includes the following elements, public relation,
publicity and personal selling sales promotion.

The business shall use the following promotion method.

 Good public image
 The business will relate well with its customers and competition through use of
communication skills this improves image of the business.
 Calendar and other publications such as free booklets and note book with the business
products services on the margin.
 Use of T-shirts which bears the business name and logo.
 Operation hours .It will operate on long hours from 7.30am to 6.30 pm.

2.6 ADVERTISEMENT AND PROMOTION

The aim of advertising is to attract more customers and orientation of the business to the world at
large. The business will put in use the following forms of advertisement.
The media
The business will advertise its product through television and radio programmes.
Billboards and posters
Will be put in different places roadside, round-about and junctions.
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Building of interpersonal relationship with neigbouring school, factories, and general public for
example issue time table free after sale or inquiry of the farm products and services.
Cost
The business will try its best to minimize the cost of advertisement to reduce the expenses; the
business therefore will advertise some of its products through the use of employees.
Frequency of advertisement
The business will do advertisement once a day through INOORO fm.

2.6.1 FACTORS TO CONSIDER DURING PRICING

Objective of the pricing
Price set will cover the cost of production, therefore the price must yield return.
The market structure
The business will be simply a risktaking because of high competitive market structure.
Government policy regarding monopoly pricing
Degree of physical differences such as product texture and packaging.

2.6.2 SALES TACTICS.

The business will use the following selling tactics
 Direct selling to both potential and regular customers
 Discounting of products
 Credit services especially to potential customers
 Impromptu services during low sales and reduce overstocking
 Use of agents and promoters by staff quarters

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 The business will utilize distributors and agents.

2.6.3DISTRIBUTION STRATEGIES
The business will major in zero –level channel of distribution (producer-consumer selling). This
method involves direct selling which is less expensive and simple to operate.
Over-counter purchasing, where customers buy over the counter bargain and pay for the products
and services offered at the cashier desk.

CHAPTER THREE

3.0 ORGANIZATION/ MANAGEMENT PLAN

The proposed business will be managed by the owner who is also responsible of formulating
rules and regulations governing the firm. The management team includes the manager who is
also a purchasing manager, accounts supervisor, inventory and sales supervisor. The non-
management team will include general workers, security personnel and the drivers.

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3.1 SMART FARMER ORGANIZATION STRUCTURE

MANAGER

ACCOUNTS SUPERVISOR SALES

SUPERVISOR SUPERVISOR

SECURITY DRIVER GENERAL

PERSONNEL WORKER

3.2 KEY MANAGEMENT PERSONNEL /BUSINESS MANAGERS

NAME POSITION QUALIFICATION DUTIES AND RESPONSIBILITIES

Manager Must have Degree in BA or He/she will be creating policies to the
human resource management
management or any other He/she will carry out firm purchases
degree and relevant Organize the annual general meeting
experience. Carry out research towards business
Must have knowledge and improvement
skills from the study of
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 entrepreneurship and human Responsible for allocating activities to
resource management. the staff
Must have experience from
any institution where she
was on industrial attachment

Accountant CPA final certificate or Keep books of accounts

must have a diploma in Prepare annual reports
Business Administration Writing receipts and filling copies of it
Must be computer literate for reference
Must be honest , trustworthy Deposit and withdraw money on
and should be a person of behalf of the manager
integrity Should work under minimal
supervision
Salesman Should have a certificate in Keep inventory records
sales and marketing. Check delivery and stock available
Should have been in a Receiving goods from the suppliers
working field for years and issues them to customers
Must be honest and
trustworthy
Should have good public
relations
Should be of age 20-45
years

3.3 OTHER PERSONNEL DUTIES AND RESPONSIBILITIES

NUMBER OF EMPLOYE QUALIFICATION DUTIES AND RESPONSIBILITIES

EMPLOYEES E
2 Security Must have certificate To direct customers
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 Personnel for National Youth
Service (N.Y.S) on To maintain law and order around the business premises
defense To provide 24 hours security around the business premises
Must have an age of
between 20-45 years
Must have general
knowledge of
education
1 Driver Should have BCEFG To liaise with both purchasing and marketing on goods to
class driving license. transport either to the form or to customers.
Must have 2 years Be in charge of the transport facilities and inform
working experience management on necessary repairs and maintenance .
Must be a form four
leaver with a
minimum grade
mean grade of C-.
3 CARRIERS Any person To help in moving of goods in and out of the store.
Must be over Loading the vehicles.
18years old

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1 RECRUITMENT
LEMMI AGRO VET intends to recruit employees basing on their educational levels and
experiences, recruitment will be done on advertisement through posters and
through chief Barazas. The business intends to liaise with many training institutions purposely
for graduates who are above average performance.

xxv
This will really enable the business enterprise to improve its handling of differed tasks for
effectively. Nevertheless any recruitment exercise that will require advertisement will be done
through appropriate advertisement media.

3.4.2 TRAINING
The business intends to train employees in future on necessary skills required in business. This
will also be done when the business has grown and has generated enough profits to sustain
trainings. Employees will be taken for workshops and seminars, exchange programmes and
inviting experts to advise installation of computer in the business to cope with changing
technology and to increase the competitiveness of the business.

3.4.3 PROMOTION METHOD

This is an act of promotional employees as matter of motivating than in their various field of
operations. Employees promotion will be based on.
Their efficiency
The proprietor intends to promote hardworking employes who work efficiently with the aim of
increasing productivity to the firm.
Academic qualifications
Employees who possess high education level will be promoted accordingly. This is due to the
experience and skills they possess.
Hardworking and honest
The proprietor intends to promote hardworking and honest employees. This is done through
measurable performance.
Incase of high future returns
The business intends to promote the employees in future when the firm has experienced high
profit margin.

xxvi
3.5 REMUNERATION AND INCENTIVES

3.5.1 REMUNERATION GUIDELINES

The business intends to pay employees wages and salaries under the regulations and wages terms
of employment. This will assist the business to meet with the legal requirement and those factors
will be considered when paying employees wages and salaries.
Nature of the job
Employees will be paid according to the type of the job in the business.
Number of hours worked
Employees’ salaries will be paid basing on the number of days worked in a month.
Job groups
The proposed business plan to employ casual workers in future, terms of payment will depend on
whether an individual is casual worker or permanent employee.

3.5.2 INCENTIVES
These are reward offered to the employees. They are meant to motivate them in undertaking the
activities effectively.
Presents and rewards
Efficient and effective employees will be rewarded with presents in order to motivate them.
Organization trips
The business after a reasonable time will arrange to take their employees for a trip. This act will
motivate them.
Writing recommendation letters
Management will ensure that whenever an employee does well in certain areas in the business
they are given a recommendation letter of appreciation with relevant signature and business logo.
This will help them during employees promotions and also in their future endeavors in search for
another job if necessary.

xxvii
Also the business will offer the following;
Free lunch and tea
The business will ensure its employees are given tea and allowances.
Transport allowance
Transport allowances will be granted to employees to enable them to come to work on time and
break for their home at the evening without much inconveniences.
Overtimes
The business will come up with a package of rewarding overtime to every extra one hour to
encourage the workers to work selflessly to attain the business objectives.
Medical allowances
Medical allowances will be grated to employees of the proposed business in case of illness.
Pension
The business plans to register all employees with the national Social Security and (NSSF) so as
to secure monetary for retirement age.

3.6 LICENSE AND PERMITS AND BY LAWS

It regard to the terms of business operations in the country, enterprise has to acquire some
monetary documents to legalize its operation. The documents to be acquired are:-
 Trade license from the Nyahururu town council
 Transport license from transport license board
 Medical certificate from Nyahururu district hospital
Licenses
The business will obtain permission for the activities intended by obtaining a license from the
central government under the ministry of trade and industry licensing law of Kenya.
Permit
The business will obtain a permit from (local government) law of Kenya. The business will be
given an authority to operate in the site after filling a form showing name, location and the nature
of business. The proposed business will therefore be registered under its official name to
commence its operation.
Taxation power
xxviii
The law states that taxations and other revenue government and district government shall set out
the schedule thus the location authority taxes are collected from all business operating within
NYAHURURU town to raise revenue which is used for improving trading within the town such
as water projects, repairs of sewages, repair of roads and other sanitations premises.
Environmental and Natural Resources Act 8 section 89.
Discourage waste and encourage recycling
The law discourages waste and encourages recycling thus council requires each business
operation in town to ensure proper collection of waste and disposal in the specific areas.
This by-law will be of great importance to Victorian agro vet i.e. will enable the business operate
effectively and efficiently within any legal problems with the government of Kenya or the county
council authority.

xxix
 CHAPTER FOUR

4.0 OPERATIONAL / PRODUCTION PLAN

Production and operational plan deals with how the business will provide its product and the
facilities that will be used in production

4.1 PRODUCTION FACILITIES AND CAPACITY

Victorian Agro farm is expected to produce offer and sell high quality products and services that
will be in high demand thus the enterprise is aspiring to have opened its business from 7.00am to
allow its customers to buy products for their day to day activities as early as possible.

4.2.1 FACILITIES AND CAPACITIES

The business will require production facilities of right capacity in production of chemicals local
animal feeds and vaccine neutralization in sufficient quantities.

Machine Capacity Leased/ Quantity Date Total cost Suppliers

/Equipment purchased supplied (shs)
Fridge master Large purchased 1 3/2/2017 45,000 Nyahururu
electronics
Weighing scale Medium purchased 2 3/2/2017 30,000 Pima weighing
machinery
Accounting Medium purchased 1 3/2/2017 3,500 Westside
machine stationeries
Furniture & fitting purchased 3/2/2017 2,000 Westside
furniture’s
Computer Purchased 3 5/2/2017 60,000 Digital
electronics
Telephone purchased 5 4/2/2017 15,000 National
electronics
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Electrical socket Purchased 5 3/2/2017 1,000 National
electronics
Cello tape purchased 12 3/2/2017 120 Midpoint
stationery
Vaccinator purchased 12 3/2/2017 1,200 Paksons
syringe vetenary shop
Drenching guns purchased 10 6/2/2017 5,000 Pakson
vetenary shop
Drum pumps purchased 3 4/2/2017 4,500 All Farmers
vetenary
TOTAL 167,320

Machines and equipment will be locally obtained with agreement for transfer to the owners
premises.

4.3 PRODUCTION STRATEGY

The business will incur monthly expenses for the production on the following.
labour cost
Raw material cost
Production overhead cost

4.3.1 THE COST OF LABOUR

It involves employees’ salary and allowances
TITLE NO. OF WORKERS AMOUNT (SHS)
Manager 1 20,000
Personnel manager 1 15,750
Accountant 1 14,450
Sales clerk 2 7,250
Production assistant manager 3 10,150

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Veterinary doctor (hire) 4 2,100
Driver 2 7,250
5 2,175
Total 19 79,175

MONTHLY LABOUR REQUIREMENT

No of Workers Cost/Hr No. of Hours/Month

Manager cost/hr = cost per day

24 hrs (a day)
= 20,000 = shs. 27.77hr
30
1.27.77(24x30) = shs.20,000
Personnel manager 15,750 (24x30) =shs.15,75.0
30
Accountant 14,500(24x30)
30 = sh 14,500

Sales clerk 7,250 (24x30)

30 = sh 7,250
Production Assistant manager 10,150 (24x30)
30 = sh10,150
Security guard 2,100 (24x30)
30 = sh 2,100
Driver 2,175(24x30)

30 = sh2,175

4.3.2 RAW MATERIAL COST

Product/service Quality Price per item 9shs) Total cost (shs)
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Animal feeds 20,000kgs 30 60,000
Herbicide 40 tablets 10 400
Fungicide 40 tablets 10 400
Insecticide 40 tablets 10 400
Nematicide 40 tablets 10 400
Wormicide 40 tablets 10 400
Dairy feed 200packets 50 1000
Layers mash 100 packets 50 500
Onion mash 100 packets 50 500
Deworming 120 120
Vaccination 20 20
Stock spraying 100 100
Crops spraying 3,500 3,500
Disinfection 500 500
Washing
Totals 68,240

4.2.3 PRODUCTION OVERHEAD COST PER MONTH

ITEM AMOUNT (SHS)
Electricity 1,200
Water bill 25,000
Insurance 200
Provision for advertisement 1500
Telephone 700
Postage 500
Stationery 2000
Provision for depreciation 1500
Provision for debts 800

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Provision for maintenance repair 3500
Transport cost 1000
Committee meeting 1000
Municipal charges 600
Total 39500

4.2.4 SUMMARY OF TOTAL MONTHLY PRODUCTION COST

ITEM AMOUNT
Labour cost 79,175
Raw material cost 68, 240
Production overhead cost 39,500
Grand totals 186, 915

4.3 PRODUCTION PROCESS

The processed business will be involved in production of finished goods and distribution.
Steps involved
Customers orders of goods from stock and payments on cash or credit.
Customers who buy in large quantity such as factory, discount will be offered to encourage
buying.
The business will source the information concerning the suppliers through quotation.
Ordering
The materials required in the business will be ordered through purchase order. This will state the
right specifications of materials required.
Transportation
The suppliers will liase with the supervisor about the impending order to be delivered this will
help the inventory supervisor to schedule the transport well.
Unloading of goods
Good received will be unloaded from the firm and inspected. This is done comparing the
specification of materials in the purchase order against the physical measurement o the materials.
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Price determination
The selling price of animal feeds will be based on buying price plus the transportation cost plus
the government tax also the required profits.
Selling of goods
Goods will be readily available for sale at the selling counter or customers disposal.

4.4 REGULATION AFFECTING OPERATION

Agro chemical farm will have rules and regulations governing its staff. Therefore it will be the
duty of every employee to observe these rules and regulations.
Health regulations
The proposed business will strive to abide by public health Act (cap 226) therefore the firm will
strive to maintain high standards of hygiene by keeping the environment and litters will be
dumped in a recommended place.

Labour laws
The firm will ensure that all employees are treated fairly, this is done by observing
environmental Act.

The law states rules and conditions at recruiting staff

Wages and conditions of employment . The employees’ wages and salaries will be governed by
this Act, also term of working conditions will be governed by the Act.
Environment regulations
The firm will ensure its environment is well cleared. This will be done by ensuring that bins are
placed every place needed. Also the firm will recycle water product like firm chemicals used for
making fertilizers etc.
Safety regulations
All employees in the firm are expected to observe safety rules and regulations in their disposal.
Also the firm will establish a weekly safety talk where workers will spend 30 minutes every
Friday morning before work. These talks will help employees pin point possible accidents and
the immediate first aid boxes full with the required items for first exercise all over the business
premises.
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 CHAPTER FIVE

5.0 FINANCIAL PLAN

This chapter deals with financial analysis of the business. It shows what should be invested
financial operation on what is expected from the business.

5.1 PRE-OPERATIONAL COSTS

ITEM AMOUNT (KSH.)
Trading license and legal fees 1,800
Advertisement cost 5,000
Electricity cost 5,000
Water installation 5,000
Insurance 500
Bank account opening fee 500
Loan processing fee 2,000
Telephone and Addresses 5,000
TOTAL 33,800

5.2 LEMMI AGRO VET WORKING CAPITAL

Working capital= current assets –current liabilities
ITEM 2017
SHS
Stock of raw material 29,500
Debtors 100,000
Cash in hand 860,850
Cash at bank 505,330
Working capital 1,495,680

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SMART FARMER AGROVET
5.2.1 PROJECTED CASH FLOW STATEMENT FOR YEAR ENDING 2018
MONTH JAN FEB MARCH APR MAY JUNE JULY AUG SEP OCT NOV DEC
Amount (shs)
CASH IN FLOW
A
Opening bal b/f - 260800 302350 340700 404000 496200 638200 730300 822550 845850 868150 865350
Cash sales 200000 150000 100000 100000 150000 200000 150000 200000 100000 80000 50000 20000
Debtors 5000 5000 5000 5000 5000 5000 50000 5000 5000 5000 5000 5000
Loan 120000 - - - - - - - - - - -
Owners equity 100000 - - - - - - - - - - -
Total ash inflow 425000 415800 402850 445700 559000 701200 793200 935300 927550 930850 923150 890350
CASH
OUTFLOW B
Cash purchases 150000 100000 50000 30000 50000 50000 50000 100000 7000 50000 45000 15000
Creditors 500 500 500 500 500 500 500 500 500 500 500 500
Advertisement 1000 500 500 - 1000 1200 1200 1000 - 1000 500 1000
Trading license 500 - - - - - - - - - - -
Miscellaneous 500 400 200 200 250 200 100 150 100 100 200 200
Drawings 1000 1500 500 500 500 500 500 500 500 500 1000 1000
Interest on loan 200 200 200 200 200 200 200 200 200 200 200 200
Transport 500 500 500 500 500 500 550 550 550 600 600 600
Salaries & wages 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500
Electricity bill 1000 800 700 700 750 750 750 700 750 750 800 1500
Water bill 1500 1550 1550 1600 1600 1650 1650 1650 1600 1550 1500 2000
Total cash flow 164200 113450 62150 41700 62800 63000 62900 112750 81700 62700 57800 29500
Net cash c/d 260800 302350 346700 404000 496200 63820 730300 8225550 845850 868150 865350 719300
Accumulative 260800 563150 909850 1313850 1810050 2448250 3178550 4001100 4846950 5715100 6580450 7299750
cash
5.2.2 LEMMI AGRO VET
INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2017
SHS. SHS.
PARTICULARS
Sales 2,500,000
Less : Cost of sales
Purchases 900,000
Less: Closing stock 860,850 39,150
Gross profit 2,460,850
Less: Operational expenses
Salaries and wages 90,000
Water bills 19,400
Electricity bills 9,950
Transport 6,450
Transport 2,400
Miscellaneous 2,600
Advertisement 8,900 139,700
Net profit before tax 2,,321,150
Less: Provision for tax 10%
10% 2,321,150 (232,115)
Net profit after tax 2,089,035

5.5 PRO –FORMA BALANCE SHEET

SMART FARMER AGROVET
Pro-forma opening balance sheet as at 31st December 2017
SHS SHS
FIXED ASSETS Capital 500,000
Computer 200,000 Owners equity 100,000
Furniture 200,000 600,000
Equipment 104,320 Add: Net profit 2,089,035
Total fixed assets 504,320
CURRENT ASSETS Less: Drawings 8,500
Stock 29,500 3,789,035
Debtors 100,000 LONG TERM LIABILITY
Cash at hand 860,850 Bank loan 120,000
Cash at bank 1,505,330 SHORT TERM LIABILITY
Creditors 99,465

5.6 BREAK EVEN LEVEL

LEMMI AGRO VET FOR THE YEAR ENDING 31ST DECEMBER 2018
FIXED COST EXPENSES SHS.
Trading license 500
Interest on loan 2,400
Salaries & wages 90,000
Total fixed assets 92,900
VARIABLE COST
Advertisement 8,900
Miscellaneous 2,600
Transport 6,450
Electricity bill 9,950
Water bill 19,400
47,300

Break Even Point = Fixed x 100% profit margin = Gross profit

Contribution sales ration sales

Contribution = Sales – variable cost (shs.2,452,700

Shs. 2,500,000-sh47,300 = sh.2,452,700 = 97.39%
= 2,452,700 x 100%
2,500, 000= 96.85%
BEP = 95,921.53 UNITS

5.7 PROFITABILITY RATIOS

LEMMI AGROVET ENTERPRISEFOR THE YEAR ENDING 2017
Return on sales = Gross profit x 100
Sales

Owner equity = (Net profit + opening capital ) – Drawing =

(1,189,035+500,000) – 85000
= 1,680,535 units
ROE = 1,189,035 x 100%
1,680,535
= 70.75
Return on investment = Net profit after tax x 100%
Total investment
Total investment = current assets + fixed assets
= 504,320 + 505,330
= 200,000
ROI = 1,189,035 x 100% = 59.45
200,000
5.8 DESIRED FINANCING
LEMMI AGRO VET
ITEM SH.
Pre-operational cost 33,800
Working capital 1,495,680
Fixed assets 504,320

Total 2,033,800

5.9 PROPOSED CAPITALIZATION

ITEM AMOUNT
Owners contribution 200000
Total borrowed( friend+ relative) 200,000
Loans from bank(s) 500000
Group 200000
TOTAL INVESTMENT 1100,000

APPENDICES

EXECUTIVE SUMMARY
Business description
LEMMI agro vet is a sole proprietorship business. The owner of the business will be Samuel
ndehi . He is 21 years old and a graduate in electrical engineering. The business will be located at
Nyahururu town. The enterprise is expected to commence the activities of the business once the
finances and other legal requirements have been met. The main activities will involve selling
animal drugs, feeds, farm inputs and offering training services to the farmers. The main unique
feature of the enterprise will be promptness in service and quick reach to the customers.

The opportunity and entry strategy

The major enticing entry to the business is the high population settlement hence a great need for
animal products. The entrepreneurs plans to reach the consumer through offering transport to bulk
goods, discounts etc. The entrepreneur intends to intensively advertise to ensure that the products
are known by the potential customers. With generation of greater profit margins, similar business
will be opened in other areas.

The target market

The major potential customers are the small scale farmers who have invested in daily farming .
They will be reached by making notices on meetings, advertising through media and offering free
t-shirts to the first customers.
The competitive advantage
The main advantage is the location in relation to the competitors. The firm will be close to the
farmers and also will be offering transport what the competitors don’t do.

The management
The owner will be the manager. Experts in different field will be in use to ensure quality products
and services reach the customer. Competent drivers will be used.

The financial plan

The business is set to begin at a cost of ksh 1,000,000. The owner has about 72% in hand hence
the dream is close to reality. The balance will be on credit from banks and friends. The main
expenditure at the starting phase will be in purchase of assets and consumables to help in initial
operations.

The overall schedule

The operations of the firm will commence after a consultative meeting with the recruited team.
This will be before the declaration of the business open.