SHIKA COSMETICS AND BEAUTY SHOP

P.O BOX 345, KITALE

TEL: 0759711598

Email: winnieshikanga6@gmail.com

TITLE: BUSINESS PLAN

COURSE CODE : 503210

PAPER NO : 307B

NAME : SHIKANGA WINNIE SHANYISA

INDEX NO. : 5032100269

PRESENTED TO: THE KENYA NATIONALEXAMINATION

COUNCIL INPARTIAL FULFILMENT OF

THE REQUIRED FOR THE AWARD OF

DIPLOMA IN

BANKING AND FINANCE

SUPERVISOR : MADAM NORAH ODHIAMBO

CENTRE NAME : KITALE NATIONAL POLYTECHNIC

CENTRE NO : 5032100

DATE : NOVEMBER SERIES 2022

DECLARATION

The work presented to in this booklet is all about my creativity and my knowledge concerning
business and not from any other source.

NAME: SHIKANGA WINNIE SHANYISA

SIGN: ………………………..

DATE: ……………………….

SUPERVISOR

NAME: MADAM NORAH

SIGN: ……………………….

DATE: ……………………….

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DEDICATION
I dedicate this work of my hands to Heavenly Father who gave me the strength to write this
business idea and also to my parents who supported me to carry out this business. Also to my
friends, relatives, and classmates who advised me to carry out this business.

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ACKNOWLEDGEMENT
I wish to register my appreciation to my supervisor madam Norah Odhiambo for the great
assistance as a subject lecturer and his guidance throughout the process of writing this business
plan. I would also like to present my immeasurable and massive thanks to my parents Mr.
George Shikanga and Madam Beatrice Shikanga. May God bless you.

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TABLE OF CONTENTS
DEDICATION............................................................................................................................................iii
ACKNOWLEDGEMENT..........................................................................................................................iv
DEFINITION OF TERMS......................................................................................................................vi
CHAPTER ONE..........................................................................................................................................1
BUSINESS DESCRIPTION.......................................................................................................................1
1.1 BUSINESS NAME............................................................................................................................1
1.2 BUSINESS LOCATION AND ADDRESS.......................................................................................1
1.3 FORM OF BUSINESS......................................................................................................................1
1.4 TYPE OF BUSINESS.......................................................................................................................2
1.5 GOODS AND SERVICES................................................................................................................2
1.6 JUSTIFICATION OF OPPORTUNITY............................................................................................2
1.7 INDUSTRY.......................................................................................................................................3
1.8 GOALS OF THE BUSINESS...........................................................................................................3
1.8.1 LONG TERM GOALS...............................................................................................................3
1.8.2 SHORT TERM GOALS.............................................................................................................3
1.9 ENTRY AND GROWTH STRATEGY............................................................................................3
CHAPTER TWO.........................................................................................................................................5
2.0 MARKETING PLAN............................................................................................................................5
2.1 INSTITUTIONAL CUSTOMERS....................................................................................................5
2.2MARKET STRACTURE...................................................................................................................5
2.3 COMPETITION................................................................................................................................6
2.4 ADVERTISEMENT..........................................................................................................................7
2.5 SALES PROMOTION......................................................................................................................7
2.6 PRICING STRATEGY.....................................................................................................................8
2.7 DISTRIBUTION...............................................................................................................................9
CHAPTER THREE...................................................................................................................................10
3.0ORGANIZATION AND MANAGEMENT PLAN..............................................................................10
3.1 ORGANISATIONAL CHART.......................................................................................................10
3.2 KEY PERSONEL............................................................................................................................11
3.3 OTHER PERSONNEL....................................................................................................................11
3.4 RECRUITMENT, TRAINING AND PROMOTION......................................................................12
3.4.1Recruitment...............................................................................................................................12

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 3.4.3Training.....................................................................................................................................13
3.4.4 Promotion.................................................................................................................................13
3.5 REMUNERATION AND INCENTIVES........................................................................................13
3.6LICENSE AND PERMIT.................................................................................................................13
3.7 SUPPORT SERVICES....................................................................................................................14
CHAPTER FOUR.....................................................................................................................................16
4.0 OPERATION AND PRODUCTION PLAN.......................................................................................16
4.1 OPERATIONAL PLAN..................................................................................................................16
`4.2 PRODUCTION PLAN...................................................................................................................17
Table 2...................................................................................................................................................18
4.3 PRODUCTION FACILITIES AND CAPACITIES........................................................................18
4.4 PRODUCTION PROCESS.............................................................................................................18
4.4.1INSPECTION OF GOODS.......................................................................................................19
4.4.2PAYMENT OF GOODS...........................................................................................................19
4.4.3OFF-LOADING AND ARRANGEMENT OF THE GOODS IN THEIR PREMISE...............19
4.4.4ADVERTISEMENT FOR THE GOODS..................................................................................19
4.4.5RECORDING AND FILLING THE TRANSACTION ORDER...............................................19
4.5 REGULATION AFFECTING OPERATION..................................................................................19
CHAPTER FIVE.......................................................................................................................................21
5.0 FINANCIAL PLAN............................................................................................................................21
5.1 PRE-OPERATIONAL.....................................................................................................................21
5.2 WORKING CAPITAL=C.A-CC.....................................................................................................21
5.3 CASH FLOW PROJECTIONS.......................................................................................................22
5.4 PROFORMA TRIAL BALANCE YEAR ONE..............................................................................25
5.5 BALANCE SHEET YEAR ONE....................................................................................................28
5.6 BREAK EVEN ANALYSIS............................................................................................................31
5.7FINANCIAL RATIOS.....................................................................................................................33
5.8 DESIRED FINANCING.................................................................................................................33
5.9 PROPOSED CAPITALIZATION...................................................................................................34
APPENDICES...........................................................................................................................................35
MAP......................................................................................................................................................35
LOGO....................................................................................................................................................36

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DEFINITION OF TERMS
Goal - it is an idea of the future or desired results that a person or a group of people envasion
plans and commit to achieve.
Market share - is the population or people who will require the service offered by the business.
Competition - is the activity or condition of striving to gain or win something by defecting or
establishing superiority over others.
Promotion - is the publicizing of a product, organization or venture so as to increase sales or
public aware.
Price - is to discover the monetary value of an item.
Advertising - is the action of calling public attention to an idea goods and services through
payment.
Recruitment - is the process of finding candidate for a past in an organization.
License - a document which gives the business power to operate.
Support service - are professional services that are offered to the business.

ABBREVIATIONS
NP- Net profit
NHIF- National Hospital Insurance Fund
NSSF-National Social Security Fund
CA- Current Asset
KCB- Kenya Commercial bank
WC- Working capital
CL-Current liabilities

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SYNOPSIS
BUSINESS DESCRIPTION
The business will bear the name SHIKA BEAUTY AND COSMETICS SHOP which will be
located in Kitale town along Kenyatta Street opposite Khetias supermarket. The business will be
owned by Winnie Shikanga as the sole proprietor. This will be involved in selling and buying of
building materials and construction equipment and materials .This is done to high demand of
building and civil construction going on in the region at large due to the current fast growth of
the country’s economy and government at large towards vision 2030.The main objective of the
business is to create self- employment and other job opportunities to the community.
MARKETING PLAN
The business will have customers comprising of individual customers ,institutional customers
and commercial customers who will be in high demand of the products .Competitors of the
business will be five in number and which will have their own strength and weakness such as
quality prices as strength and lack of customers ,poor communication as their weakness .Due to
this weakness the proposed business will be the first on the competitive analysis sheet thus
taking the largest share of the market. The total population of the region is 3500of 42% will be
served by the proposed business
The determination of price customer oriented will be used .Advertising and promotion will be
through poster and employees dust coat.
ORGANISATION AND MANAGEMENT PLAN
The business owner will be the manager and employees will be seven in number .The salary to
employees per month will be 8490ksh.promotion of the workers will base in how the business
will be generating income and their incentive to working hand .License and permit will be
obtained from the local government ministry at a cost of4000 at the start of every financial year.
PRODUCTION PLAN
In order for efficiency in performance of the business ,the owner will put in place facilities
amounting to KSH 500000.The monthly raw materials required will cost to a total of 400000
while the total production cost will be 90000.
FINANCIAL PLAN
The business will start with a capital of KSH500000 .In the first year will include operation
capital 0f KSH236000 fixed cost as KSH 90000 and contribution margin percentage

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 CHAPTER ONE

BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The proposed business is cosmetics and beauty shop. The business is SHIKA BEAUTY AND
COSMETICS SHOP. The reason for choosing cosmetic and beauty shop is as follows: The
business does not require high capital to start, the business is suitable for both beings that is men
and women, the business deals with what most people use, the business sell products and gives
services to the customers at a cheaper price

1.2 BUSINESS LOCATION AND ADDRESS

The enterprise will be located in Kitale town along Kenyatta Street opposite Khetias
supermarket. The enterprise will be located and situated on Ambwere plaza building ground
floor door number five. The business will be located at that point due to its strategic point, the
place is at the Centre of the town where everyone is able to access it, the point, and the place is at
the Centre of the town where everyone is able to access it, the point is always busy hence it will
attract more customers, the point is also near office and where many people pass through, the
place is in an open point where one can easily see without interference by other buildings

1.3 FORM OF BUSINESS

The proposed form of business will be sole proprietorship since it will be owned by one person
who is Winnie Shikanga. The reason advantages and disadvantages as to why this type of
business was chosen is: for easy decision making, it is very easy to manage and the owner is
exercised, the owner enjoys all the profits alone, owner’s background.
2021-date- student at the Kitale National Polytechnic
2018-2020- runned a cosmetic shop
2015-2018-attended high school at Samitsi Girls School
2007-2014- attended primary school at Isanjiro
The owner has a two years’ experience in running a cosmetic shop
The disadvantages for the proposed business are; In case of a loss the owner bears all risks alone,
sole proprietorship promotes individual, it might be difficult to make appropriate decisions since
there is no consultation

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1.4 TYPE OF BUSINESS
The type of business will be a service land of business. The type of business proposed will be a
medium scale business. It will be medium hence the capital will not be that much.
The raw materials will be sourced from large scale business, wholesalers and from the industries.
The enterprise will intend to employ at least two employee for a start. The weather in Kitale will
favor me hence during sunny days most people will come for hair straightening and message
hence during rainy season most customers will come for hair bradding since they don’t want to
risk damage of their hair. Also during rainy seasons our products like shows caps will be sold at
a high rate due to hair protection against rain

1.5 GOODS AND SERVICES

The enterprise will be selling and offering the following services: jewelries for example
necklace, rings, watches, combs, nose rings, bangles and wrist bands. Body oil and lotion weaves
like and human hairs, braids like long braids, short braids each colors, nail polishing, and gel for
nails blow drying, plaiting braiding, hairdressing, tattooing body spray, and lipstick and lip
balms. The products listed above and services for example will be in different varieties and
qualities depending on the customer’s preference like gold and silver. The service provided will
be long- lasting for example hairdressing, nail polishing and scrubbing hence the person offering
the service will be highly stalled and qualified. In addition the product will be of modern designs
like watches and rings

1.6 JUSTIFICATION OF OPPORTUNITY

The proposed business will have many potential customers due to large market population
surrounding the site and market for the cosmetic and beauty materials, orders from schools by
students delivered on time by hired workers
The business has a better chance of succeeding due to its location. It is located in open place
where everyone is able to see
It is located in open where everyone is able to see, it is located in open place where there is a
good spacing hence many people would like to be given services when comfortable
Due to its skilled personnel, the owner of the business has skilled on how to run a cosmetic shop
due to its ability, the employees and owner have both the ability on how to run the business
There will be adequate securities since the police station is located not far from the enterprise
since the police station is located not from the enterprise moreover, security guards will be hired

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to be working at the raw materials will be available because they are large scale business and
industries near the enterprise

1.7 INDUSTRY
The industry will be under commercial trade.it is of medium size which uses advanced
technology in operation. The reason for choosing the proposed commercial trade is that the
surrounding population is growing very fast due to raw leaning institutions establishment thus
providing a ready market. The advanced technology will be through giving each by means of lipa
na m-pesa, buying of goods through online and customer care services
Fluctuation in price is the fact of prices going up and down in a business enterprise

1.8 GOALS OF THE BUSINESS

A goal is defined as meeting the expectations required. They are of two types, short term and
long term
Short term goals is defined as something someone wants to do in the near future while long term
is something that will take significant time effort and planning to be achieved

1.8.1 LONG TERM GOALS

 To open more branches
 To expand business enterprise by the profits made
 To employ more trained workers according to their qualifications
 To increase salaries for the employees who work smart
 To advertise the business at advanced levels like social media

1.8.2 SHORT TERM GOALS

 To create employment opportunity
 To obtain adequate stock for supply
 To meet expectations required for example adequate supply of materials to customers

1.9 ENTRY AND GROWTH STRATEGY

The business will be familiarized with entering the market. Through adverts media for example
television, newspaper, national magazines and posters which will be placed everywhere to be
easily noticed by people.
The business will be unique in that it will be the only business where prices will be negotiable
and cheap to rate to all classes of people. At the grand opening of the business, there will be a
3
special offer and gifts to those who will make money orders. The capital to start the business is
set at ksh 20,000 coming from the entrepreneur savings and family supplements. This amount
will be enough as budgeted to meet the expenses incurred as the business commences its
operation forward
Entry strategy
To enter the market, the business will deal more in adverts through media to make it familiar and
popularized among the people. Posters will also be printed with information on the products and
services available for sale.
Growth strategy
Here, all the products and services will be offered at a negotiable price and special offers to
customers who regularly buy or visit the enterprise. Those using money order will acquire gifts
to motivate them.

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 CHAPTER TWO
2.0 MARKETING PLAN

2.1 INSTITUTIONAL CUSTOMERS

These are organizations or institute that require you product in bulk for their own use. There are
secondary and primary schools within the locality for example ST.Anthony Boys High School,
St Mary’s Nai Girls hospitals like the Kitale teaching and referral hospital, cherangang nursing
home college and training college and Kenya medical training college may require to be supplied
with beauty materials for ladies. The mode of payment will be through cheques and lipa na M-
pesa. The cheques will be deposited through the Kenya Commercial Bank (K.C.B)

2.2MARKET STRACTURE
Market share is the percent of the total sales in industry generated by a particular company. The
total population of the people around the cosmetic and beauty shop is 60,000 people. My target
population. The remaining percentage is for the competitors around the enterprise. The enterprise
is near a college where the college has more ladies and young men, near the school will give
more customers because it has a large population. The enterprise will attract the student, hence
most of the beauty products, the enterprise is well stated and located hence anyone can reach it
easily.
Name of business No. of customers Percentage
Shika cosmetics and beauty 30000 50
Mwingi boutique 5000 10
Aisha 5000 10
Mapito salon 5000 10
Killmall 15000 20

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 Market share
Shika cosmetis Mwingi Aisha Mapito Killmall

20%

10% 50%

10%

10%

2.3 COMPETITION
Competition is the activity of condition of striving to gain something by defeating or establishing
superiority over others. Direct competitors are the business that sells a similar product or service
in the same category as you but it is different enough to act as a substitute for your product. The
following are direct competitors, kilimal salon, Aisha cosmetic shop, Mapito salon, Mwingi
boutique, Lyne Beauty. The following are indirect competitors Shanyisa’s catering team,
Milimani dispensary, Keshy’s collection, George’s liquor shop, the Giffin’s hotel, Rocozie’s
grocery, Betty’s Cereal Shop, County restaurant, Club one touch and Platinum hardware
BUSINESS STRENGTH WEAKNESS
SHIKA COSMETIC AND  use of modern  --
BEAUTY technology
 best site location
 trained personnel with
experience
 incentive to customer
 low pricing of
customers
KILIMAL COSMETIC AND  good conduct  long awaiting time
BEAUTY SHOP

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  trained manpower
MAPITO BEAUTY AND  good skills
COSMETIC SHOP  quality product
MWING COSMETIC AND  good stalls
BEAUTY SHOP  quality product
 poor location
 poor service to
customers
 high pricing
 poor customer service
 lack of variety
 lack of qualified staff
 high price
 poor conduct
 inadequate personal

My enterprise’s weakness will come to an end that is no giving discount when the business
income rises and also after getting frequent customers from that locality whose service and
product offered to them will be discounted

2.4 ADVERTISEMENT
Advertisement is the process of familiarizing products and services of the business to the public
The reason why I would advertise is simple
Advertisement will make my enterprise to be known, advertisement will attract customer to
come to my enterprise, and advertisement will make customers come for the services available,
The advert method that will use are use of posters whereby the enterprise will facility printing
and placing posters on walls and posts that will boar pictures of products and services offered
Newspaper this is where the advertisement will be done in daily newspaper and magazines where
people will get information billboards. This is where they will be placed at strategic place along
the highways
Signposts. This will be mostly placed at round about and at the junctions
Use of cards whereby you give people sticker cards which have the description of the business
and where it’s located and the services it provides

2.5 SALES PROMOTION

Promotion is the activity that encourages a cause venture aim. Promotion of product will be done
to get estimated. My sales promotion will be through discount, shows after sales services,

7
exhibitions, hobbies. The reason why I want to promote my business commodities is simple and
that is I want my business to grow faster, I want my business to be ranked among the best in
town, I want my business to be known in the town

2.6 PRICING STRATEGY

Pricing is the value that is put to a product or service. The pricing strategy of my commodities
will be arrived at using the following methods:
Cost plus
The enterprise will consider buying price and the add its profit margin to avoid undercharging
and overcharging, physiological pricing. This will be conducted on occasions. When the demand
is high, the price will be set high and low demand will lead to allow price charge. The product
that are bought most will lead to a low demand will lead to allow price charge. The product that
are bought most will be priced highly since the demand will be high competitive pricing. This
involves checking the competitor’s price at the market compare them and finally decide on the
prices to change. This will create room for more customers if prices are fairly low as compared
to the competitors
PRODUCT SHIKA KILMAL AISHA MAPITO MWING
Blow dry full 150 200 180 170 190
half without wash 80 80 90 90 90
half when washed 60 100 100 80 120
full when not washed 200 250 200 200 250
Braiding Small 1000 1200 1500 900 1300
Big Braids 850 1000 1300 800 1000
Medium 800 950 1000 750 900
Weaves Small 2500 2000 1500 1800 2000
Short Weaves 2000 1500 1400 1850 1500
Medium 2500 2000 1500 1800 2000
Braid short 45 60 70 75 80
long braid 55 75 85 95 100
medium 45 60 70 75 80
Nails sticker 100 250 180 200 230
Rings 50 150 200 50 100

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 Eye Liner 180 200 200 200 200
Lip glue 150 200 120 150 100
Lip gloss 100 80 100 120 130
Massage full 3000 4000 5000 4500 3500
massage half 2500 3500 4500 4000 3000
Face scrub 800 1000 1000 1000 1000
Nail polishing 200 250 300 500 350
Make up full 3000 4500 4800 5000 3500
half make up 2800 3800 3500 4000 3000
Eye brow shape 150 200 180 180 200
Bangles 150 150 180 200 120
Cutex big 100 120 150 110 120
Foundation 200 250 200 200 200
Ponds 150 170 180 170 150

2.7 DISTRIBUTION
Distribution is a chain of market intermediaries or middle men used by a producer or a marketer
to make products and services available when and where customers want them
Shika beauty and cosmetic shop will have to use a channel of distribution which if from the
manufacturer to the supplier

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 CHAPTER THREE

3.0ORGANIZATION AND MANAGEMENT PLAN

3.1 ORGANISATIONAL CHART

MANAGER

ASSISTANT MANAGER

SALONIST MAIN ARTIST

MESSENGER

WATCHMAN

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3.2 KEY PERSONEL
TITLE DUTIES/RESPONSIBILITY QUALIFICATION AND
EXPERIENCE
Manager  should make decision for the  most have a diploma in
business business administration from a
 research for market recognized institution
 the overall supervisor of the  one year experience in the
business relevant field
 to recruit new employees  computer skill

3.3 OTHER PERSONNEL

TITLE DUTIES/RESPONSIBILITY QUALIFICATION AND
EXPERIENCE
Assistant Manager  coordinate all the  must have a
employees certificate in
 ensure the smooth business
running of the work administration
in the organization  able to speak
 receive and apply to English and
business letter and Kiswahili
telephone calls
Salonist  to give service to the  relevant
customers braid qualification from a
 style and attend to recognized
customers institutions
Main Artist  to give service like  have a certificate in
message and art
tattooing to  design from a
customers recognized
institution

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 Messenger  to give and receiving  relevant certificate in
information regarding secretarial studied in
the enterprise a recognized
 to inform the institution
manager on the
application and how
the business is faring
on
Watchman  providing general  should have K.C.P.E
security certificate
 report any theft cases  should be physically
to the management strong and fit
and the police station  must be courageous
and have a clean
record

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1Recruitment
Shika beauty and cosmetic shop tends to recruit employees basing on their;
Educational level
Employees with high education level will be given the first priority and also given position that
are high since they have more knowledge and skills to operate the business
Experience
Those people who have more experience and have been in the industry for a longer period that is
three year and above hence they are not new to the position being given as they have more stalls,
techniques and knowledge over the work. This will be done by advertising through mounting of
posters and employees educational institutes. The business intends to lease with many training
institutions. Purposely for graduates who are to improve its handling of different tasks
effectively.in terms of punctuality at work, good public relationship especially with customers,
and trust worthiness of employees

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3.4.3Training
On training there will be a recruit course of study for example beauty and salon. The business
tends to train employees in future on necessary stalls required in the business. This will also be
done when the business has grown and will also be done when the business has grown and
generating more profits be taken for workshops, seminars exchange programed and inviting of
experts to advise them on how to do message braids and general services. The training will also
entails good communication stalls customers care and modern styles

3.4.4 Promotion
On promotion the employees, promotion will depend on academic qualifications, working
experience, punctuality at work, trust worthiness of employees. Employee’s promotion will be
based on;
Their efficiency; the proprietor intends to promote hardworking workers who were efficiency
with the aim of increasing productivity of the firm
Academic qualification: the employees who pass high education level will be promoted
accordingly. This is due to the experience and skills they posses
Hard working and honesty: the proprietor intends to promote hardworking and honest employees
and this will be done through their measurable performance and sincerity.
In case of high future returns; the enterprise intends to promote their employee in future when
they have experienced high profit margin

3.5 REMUNERATION AND INCENTIVES

Personnel Salary NHIF NSSF Airtimes T/Port Total
Manager 20000 500 300 500 1000 22300
Ass Manager 15000 500 300 450 900 17150
Salonist 10000 500 300 - - 10800
Main Artist 10000 500 300 - - 10800
Massager 8000 500 300 200 250 9250
Watchman 7000 500 300 100 - 7900
totals 78200

3.6LICENSE AND PERMIT

A license is a document that gives the business power to operate
Name: Trade license

13
Use: Authorized trading practice
Duration: one year
Origin: trans-Nzoia County
The business will obtain this form from the central government under the ministry of trade
industry licensing law of Kenya
Permits
Name: business permit
Duration: one year
Origin: Trans_Nzoia County
Use: authority trading practice
The business enterprise will obtain a permit from legal government law of Kenya. This will give
the business authority to operate in the site where it is located

3.7 SUPPORT SERVICES

The firm will need support service which will require the enterprise to operate smoothly. The
firm will need support services as listed below
Insurance service
Shika cosmetic and beauty shop will be insured and against fire, theft and damages by rain and
wind risks
Banking services
The enterprise will open a bank account with the Kenya commercial bank, Kitale, branch which
will enable it to keep its money safely. The banks address is
KENYA COMMERCIAL BANK
P.O BOX 233-00120,
KITALE
TEL; 0700243431
Telephone services
The business will have telephone services that will enable the manager to place orders for goods
needed products. Ordered from customer. Can also be made when needed urgently. The
telephone provision will be through safaricom
M-pesa services

14
The business will have M-pesa service that will enable the business transaction to run efficiently.
The enterprise
Postal service
KITALE POST OFFICE
P.O BOX 233-00120,
KITALE
TEL. 0724346623
E-mail services
The business will have its email address for easy communication. This will enable it to place
ordered for the supply of hairs, wigs among others when need arises. The business address will
also have access to make orders for the supply of commodities’ and services using. The given
address as follows
Shika cosmetic and beauty shop 6 @ gmail.com
Legal advice
The entrepreneurs in the business will seek legal advice from long serving cosmetics and beauty
shop. The phone number is 075911598.the cost is 1000

15
 CHAPTER FOUR

4.0 OPERATION AND PRODUCTION PLAN

4.1 OPERATIONAL PLAN

The proposed business will be having its working hours from Monday to Saturday where from
Monday to Friday it will be opened as from 7:30- 9:30 pm while on Saturday it will be opened as
from 8:30am to 6:30 pm. the chosen time from mainly to evening is appropriate and favorable to
the workers, the other business competitors and also my liable customers

CAR PARK
MESSENGER

SALONIST

MAIN ARTIST

ASSISTANT
MANAGER
MANAGER

16
`4.2 PRODUCTION PLAN
Production plan gives a clear description of how the business will carry out her work to ensure
the business runs smoothly. The products to be sold would be of high quality and the price
charged will be favorable and reasonable to everyone. Products produced quality and better
respectively. Product which would be available at the enterprise will be hair (human), earrings,
necklaces, body oil, body drying and tattooing. The products in the enterprise will not have
specific appearances as one may have his/her own preferences for example one may need have
specific appearances as one may have his/her own performances for example one may need a
brown wig and another one a dark wig hence the products would be in different types and
customers preference. The services in the enterprise will again be according to the customer’s
choice hence the again be according to the customer’s choice hence the products and services
given will be of high quality standards making them to be more durable
Table 1
Item Quantity Price per unit Total Source
Water Litres 50 5000 Kitale water
Electricity Units 50 5000 Kitale town
Perfumes Grams 100 10000 Best lady
Sprays Millilitres 50 5000 Best lady
Carrier bags Numbers 10 300 Best lady
Oils grams 100 500 Best lady
Braids Grams 100 5000 Best lady
Human hair Grams 250 5000 Jumia
Jewellery Numbers 10 5000 Jumia
Cosmetics Numbers 250 5000 Best lady
Shower caps Numbers 60 300 Best lady
Hair dyes Packets 60 3000 Best lady
Lipstick numbers 180 900 Best lady
50000

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 Item Quantity Price per unit Total Source
Blow dry 8 800 24000 Jumia
Shelves 10 3000 11650 Roy hard ware
Mirror 1 50000 150000 Roy hardware
Sink 5 2800 14000 Kitale town
Sofaset 3 250000 250000 Roy hardware
Uniform 10 3000 30000 Kitale town
Dust bin 15 800 12000 Kitale town
391650

Table 2

4.3 PRODUCTION FACILITIES AND CAPACITIES

The enterprise will need production facilitate of right quality and last so as to give good services
to its customers. The facility will be access it hence the service for example massage and
tattooing will be in a comfy place for the customers.

4.4 PRODUCTION PROCESS

The business will be buying and selling artificiality made wigs. The business enterprises will be
buying goods in bulk from best lady on a Saturday. The goods will be purchases through orders
and bought to my enterprises goods. Like hair wigs will be bought through online ordered from
Jumia. The enterprise will be making orders on a Monday and delivered to the enterprise on
Saturday.
The production process is as shown below
ORDER OF GOODS

INSPECTION OF GOODS

PAYMENT OF THE GOODS

OFFLOADING AND ARRANGEMENT OF THE GOODS IN THE PREMISE

ADVERTISEMENT FOR THE GOOD

RECORDING AND FILLING THE TRANSACTION

ORDER

18
The business will place on orders for the required goods either by mail, telephone calls or though
online sales the manager of the business will in a position to place their order depending on the
business need.

4.4.1INSPECTION OF GOODS
Goods brought to the enterprise by the relevant company depending on the order will be
inspected before stored and ready for sell to ensure the good are right in quality sand in quantity
according to how they were ordered. The manager will inspect the good.

4.4.2PAYMENT OF GOODS
Goods ordered will be paid depending on the enterprise decision. The good will be paid ether
through cheques, cash or m-pesa.

4.4.3OFF-LOADING AND ARRANGEMENT OF THE GOODS IN THEIR PREMISE

Off-loading will done after inspection and payment of goods. Goods will be arranged in their
premise by the enterprise casual workers.

4.4.4ADVERTISEMENT FOR THE GOODS

The good will be advertised through posters and stickers near the business enterprises. It will be
advertise near the enterprise and slightly far from the enterprise. The good will also be advertised
online.

4.4.5RECORDING AND FILLING THE TRANSACTION ORDER

Recording of goods bought and sold will be done by the officer messenger who is the secretary
of the enterprise

4.5 REGULATION AFFECTING OPERATION

Health regulation
The business premise will be satiated to ensure fresh air circulation to avoid employee’s
suffocation which may damage the business. There will also be the provision of first aid kit to
limit inquires caused during blow drying hair and tattooing of body
Proper ventilation will be provided to avoid the breakout of diseases and motivate more
customers into the shop. The enterprise will also have funs during hot days to cool down the
temperature in the room
Environmental regulation

19
The business management will also ensure proper disposal of waste to keep the environment
clean and strategically at a cool and fresh environment to make customer comfortable when
being handled water supply will also be provided to enable the workers to clean efficiently and
for the business smooth running. The enterprise will also produce dustbin which will be disposed
in dirt and used products. The enterprise will also burn plastic products and waste products
Government regulations
Since the country has regulations, on without legal documents necessary for the business.
Therefore SHIKA COSMETIC AND BEAUTY SHOP will get a license from kitale municipal
council at a fee of ksh 5,000. Another license from the ministry of industry and trade will be
acquired through the municipal council at a fee of ksh 7,000. This will show that the cosmetic
items sold are of good quality mores or, the environment is conducive for the employees, and
there will be social security fund registration for them. The amount will be 150 for the manager,
100 for the assistant manager and so for the sales people and security officer
Safety precautions firefighting
The business will require lighting equipment so that the customers will see the hairdressing and
how the jewelry looks properly. Therefore each employee will need to be taught how to use fire
extinguisher and how rescuing should be done in case of a fire outbreak. The owner will also
install alarm systems to detect any electric current leakages is there were poor piping and wiring
in the problem before it gets serious for remedy measures to be taken before the risk occur
Labor lose
The business will consist of rent, water bills electricity, salaries etc.
Which will be paid through the business income

20
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL
This are cost incurred before the business start
EXPENSES COST
License 10,000
Rent 4,000
Advertisement 10,000
Purchases 391,650
Transport 20,000
Water 10,000
Electricity 5,000
Machinery tools and equipment 50,000
Miscellaneous expenses 121,300

Pre-operational cost 485,200

5.2 WORKING CAPITAL=C.A-CC

Item Year 1 Year 2 Year3
C.A cash 884,550 1,473,450 1,143,850
Debtors 200,000 150,000 130,000
stock 1,500,000 500,000 200,000

Creditors - 80,000 43,000

Working capital 246,550 1,923,450 1,310,850

21
 5.3 CASH FLOW PROJECTIONS
YEAR ONE

PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALS
Cash In Low - 1041850 985050 763450 567650 622850 447550 153250 12250 20150 76550 94850 4785450
Opening 2000000 - - - - - - - - - - - 2000000
Balance
Cash Sale 200000 250000 150000 100000 350000 120000 300000 150000 300000 350000 320000 450000 3040000
Debtors - - - - - - - - - - - 200000 200000
Total Cash 2200000 1291850 1135050 863450 917650 742850 747550 303250 312250 370150 396550 554850 9825450
Inflow
Cash Out - - - - - - - - - - - -
Creditors -
Pre-Operational 485200 - - - - - - - - - - - 485200
Cost
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
Water 10000 10000 8000 7000 7000 6500 10000 9000 5000 8500 9000 9500 99500
Electricity 2500 2500 2800 3000 3000 3500 3500 3600 3700 3800 3900 3950 39750
Transport 20000 20000 18000 17000 15000 15000 10000 10000 1500 12000 14000 13000 179000
Salary 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 960000
Purchases 391650 - - - - - 300000 - - - - 150000 641250
Advertisement 10000 8000 4000 3000 4500 5000 4500 3200 3100 4000 7500 5500 62300
License - - - - - - - - - - - 10000 10000
Loans 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 600000
Repair Amount 500 1000 1500 500 - - 1000 - - - 2000 1500 8000
Interest Loans 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Miscellaneous 121300 121300 121300 121300 121300 121300 121300 121300 121300 121300 121300 121300 1455600
Total Outflow 1158150 306800 371600 285800 294800 295800 594300 291000 292100 293600 301700 508250 5003400
Net Cash 1041850 985050 763450 567650 622850 447550 153250 12250 20150 76550 94850 46600 4832050
5022050

22
 YEAR TWO

PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALS
Cash Inflow
bal b/f 446000 226000 246000 226000 201000 241000 186500 250000 148150 175150 141450 38750 2546000
Cash - - - - - - - - - - - - -
sales 250000 200000 150000 150000 200000 400000 250000 100000 300000 150000 200000 200000 2791000
Debtors 70000 - - - - - - - 50000 - - 30000 150000
Total Cash 786000 426000 396000 376000 400000 641000 436500 350000 498150 325150 341450 268750 524600
Inflow
Cash Out
purchases 300000 - - - - 250000 - - 150000 - 120000 - 820000
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 480000
Water 10000 6000 5000 4000 3000 5000 4000 5000 4000 3000 7000 6000 62000
salary 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 960000
Transport 5000 8000 3000 2500 2000 3000 2500 2000 1500 1000 3200 1800 24000
license - - - - - - - - - - - - 10000
electricity 2000 1500 1000 2500 2000 3000 2500 2000 1500 1000 3200 1800 24000
repair and - - - - 500 - - 350 - - 500 - 1350
maintenance
advertisement 3000 500 2500 2000 3000 1500 1000 1500 1000 1200 1000 500 18700
miscellaneous 25000 20000 15000 20000 25000 20000 30000 25000 20000 33000 25000 26000 284000
creditor 35000 - - - - 25000 - 20000 - - - - 80000
Interest 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Total Outflow 560000 180000 170000 175000 160000 454500 186500 201850 323000 183700 302700 189300 3086550
Net Cash flow 226000 246000 226000 201000 241000 186500 250000 148150 175150 141450 38750 79450 2159450

23
 YEAR THREE
PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALS
Cash In Low
Opening 70450 46450 34850 54850 51350 24350 46350 711850 52050 46050 25550 46850 500550
Balance
Sale 350000 200000 150000 100000 120000 150000 120000 100000 120000 150000 150000 100000 3460000
Debtors - 70000 - 20000 - - 30000 - - 10000 - - 130000
Total Cash 429450 316450 184850 174850 171350 174350 196350 191850 172050 164650 117550 146850 3749250
Inflow
Cash Out
purchases 250000 - - - - - - - - - - - 250000
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 480000
Water 6000 5000 4500 7000 8000 9000 5000 8500 4000 6500 4000 7000 74500
salary 85000 85000 85000 85000 85000 85000 85000 85000 85000 85000 85000 85000 1020000
Transport 8000 7000 5000 6000 3000 2000 4000 3000 3000 2500 4500 3500 55500
license - - - - - - - - - - - 10000 10000
electricity 2000 1500 1000 2500 2000 3000 2500 2000 1500 1000 3200 1800 54000
repair 500 300 1500 - - - 3000 2500 3000 2500 3000 2500 18800
advertisement 2500 - - 1000 2000 - - 3500 - 2600 - 1500 13100
miscellaneous 15000 18000 10000 8000 18000 15000 10000 13000 15000 17000 15000 10000 164000
creditor - 10000 - - 15000 - 10000 - - 80000 - - 43000
Loans - - - - - - - - - - - - -
interest 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
total outflow 383000 140800 130000 123500 147000 128000 124500 119800 126000 39100 128100 135300 1825700
Net Cash flow 146450 34850 54850 51350 24350 46350 71850 52050 46050 25550 46850 11550 465650
8434050

24
5.4 PROFORMA TRIAL BALANCE YEAR ONE

Items shs sh

Debtors 3040000

Cost of sales

Opening stock 391650

Add purchase 841650

Less closing stock 1800000 1233300

Gross profit 3006700

Less expenses

Rent 48000

Water 99500

Electricity 39750

Transport 179000

Salary 960000

Interest 120000

Repairs 8000

Advertises 62300

Miscellaneous 1455600 (2973150)

Net profit 34550

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YEAR TWO

Sales 2,791,000

Debtor 150,000

2941000

Less; COST OF SALE

Opening stock 50000

Add purchases 820000

Less closing stock (500000) 370000

Gross profit 2571000

LESS EXPENSES

Rent 48000

Water 62000

Electricity 24000

Transport 49500

Salary 960000

Interest 120000

Repair 1350

Advertisement 18100

Miscellaneous 284000 (1543550)

Net profit 1027450

YEAR THREE

Sh sh

26
Sales 3460000

Debtors 130000

Net sales 3590000

Less cost of sales

Opening stock 100000

Add purchases 250000

Gross profit (200000) 150000

3440000

Less expenses

Rent 480000

Water 74500

Electricity 54000

Transport 55500

Salary 1020000

Interest 120000

Advertisement 13100

Miscellaneous 164000 1,999,900

Net profit 1440100

27
5.5 BALANCE SHEET YEAR ONE
Sh sh

Fixed asset

Machinery tools 50000

Current asset

Stock 1500000

Debtors 200000

Cash 884550

Total current asset 2584550

Less current liability

Loans 600000

Total current asset 600000

Working capital 198550

Figure 1 2034550

Financed by 2000000

Capital 34550

Add net profit 2034550

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YEAR TWO

SH SH

Fixed asset

Machinery tool 50000

Current asset

Stock 500000

Debtors 150000

Cash 1473450

Total current asset 2123450

Less current liability

Creditors 80000

Loan 600000

Total current liability 680000

Working capital 680000

Figure 1 1493450

Financed by1

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Capital 466000

Add net profit 1027450

1493450

YEAR THREE

Fixed asset

Machinery 50000

Current asset

Stock 200000

Debtors 130000

Cash 1143850

Total current asset 1473850

Less current liabilities

Creditor 43000

Total current liability 43000

Working capital 1469550

Figure 1 1519550

Capital 7919550

Add net profit 1440100

1519550

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5.6 BREAK EVEN ANALYSIS
Fixed Cost Year 1 Year 2 Year 3
salaries 960000 960000 1020000
rent 48000 48000 48000
license 10000 10000 10000
totals 1018000 1018000 1078000

Variable Cost Year 1 Year 2 Year 3

electricity bills 39750 54000 24000
water bills 99500 74500 62000
transport 179000 55500 49500
advertisement 62300 13100 18700
repair and maintain 8000 18800 1350
totals 388550 215900 155550

B.E.P= total fixed cost

Contribution margin

Total contribution=sales-total variable cost

Total margin %= total contribution *100

Sales

Year 1

Total contribution=sales-total variable

3040, 000-388550=2651450

Total margin percentage=2651450*100=87.219

3040000

B.E.P=1018000=11167297.328

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 0.8721

YEAR 2

Sales-total variables

2791000-2159000=2575100

Total margin percentage=2575100

Total margin percentage=2575100*100

2791000

0.92268100=92.26%

B.E.P=1018000=1103403.425

0.9226

YEAR 3

Total contribution=sales-total variable cost

1460000-155550=13044450

Total margin contribution=1304450*100

1460000

0.8935*100=89.346

B.E.P=101800=113939.675

0.8935

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5.7FINANCIAL RATIOS
Ratios usually explain the relationship between the asset liabilities and capital.it shows the level
at which asset, liabilities and capital contribute for the growth of the business

profitability ration year 1 year 2 year 3

GP/sales*100 3006700*100= 271000*100 3440000*100
3040000 294100 3590000
98.9% 87.4% 95.8%
Net profit 34550*100 1027450*100 1440000*100
N.P*100 304000 294100 3590000
sales 1.14% 34.94% 40.11%
Rate of stock 233300 370000 150000
turnover 945825 275000 150000
Cost of goods sold 0.25 1.35 1
average stock
liquid ration 2584550 2123450 1473850
CA 600000 680000 43000
CL 4.3 3.12 34.26
Acid test ratio 2584550-1500000 2123450-500000 1473850-200000
CA- closing stock 600000 680000 43000
CL 1499999 500 200
working capital 2584550-600000 2123450-680000 1473850-43000
CA-C.L 341450 1443450 1430850

5.8 DESIRED FINANCING

The total investment in the business which will be in sales. After getting the total investment in
the business the owner of the business will do the followings

At the end of first year. The business will use its profit to add more stock in the business and pay
all the expenses incurred and not yet paid

33
At the end of the year two the owner of the business will use the excess profit to expand its
business employ more workers and train the old employees to get new inventions and innovation
of making more profit in the new business

On the third year the business will use the profit to buy a lorry for the supply of goods and open
a branch

5.9 PROPOSED CAPITALIZATION

The capital proposed for shika cosmetic and beauty shop will be ksh 500000

SOURCE AMOUNT
Personal saving 40000
Donations 50000
Friend and family 50000
Loans 360000
Total 500000

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APPENDICES
MAP

SHIKA FROM ELD

COSMETICS

BEST EQUITY
TUSKYS LADY
THE KNP

BARCLAYS

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LOGO

36
37